(Trinidad Express) Finance Minister Colm Imbert’s $52 billion budget is laden with relief measures for the poor, small and medium businesses, manufacturers and tech companies—both start-ups and existing operators.
But hidden in the pages of his 2022 fiscal package, titled “Resilience in the Face of a Global Pandemic”, were tax measures that may be actualised over the next fiscal year, such as property tax, the hiring of 100 accountants and university graduates for the Board of Inland Revenue to clamp down on tax avoidance as the Revenue Authority becomes the “cornerstone” of tax collection capabilities, as well as the projection of increased utility rates.
The budget has a substantial deficit of $9 billion. Total revenue is projected to be $43.333 billion and total expenditure $52.429 billion.
The budget is based in a US $65 a barrel oil price and US $3.75 per MMbtu gas price. Easement for the poor from November 1, will be the removal of VAT from basic food items such as biscuits, cooking oil, canned vegetables, cornflakes, canned fish, canned meat, curry, juice, sausages, ham, ketchup, bottled water and pigtail.
Other significant relief measures were the announcement of a ten per cent increase- from 25 per cent to 35 per cent rebate on T&TEC bills that are $300 and lower. Imbert said this would affect 210,000 households at an additional cost of $25 million annually.
He said the water bill for the same group of households receiving the T&TEC bill rebate would receive similar treatment. He said further details (for the water rebate) will be announced in the Finance Bill of 2021. Imbert however pointed to higher utility prices, saying: “We will introduce the market based prices for electricity and water as recommended by the RIC (Regulated Industries Commission)”.
He said Government will provide low-income and vulnerable groups with appropriate rebates in the first instance. “We will develop and put in place a utility cash card, which will be made available to low income and vulnerable groups to access subsidies for electricity and water, once the prices for these services are regularised,” he said.
Wage negotiations
The Finance Minister, whose speech lasted approximately three and half hours, also announced that the Government was moving to settle outstanding wage negotiations in the public service. “I have instructed the Chief Personnel Officer to commence in 2022 outstanding wage negotiations with the relevant representative trade unions in the public service,” he said. He added that he had also been advised that several nurses in the Regional Health Authorities were employed on temporary contracts and that he had instructed the CPO to investigate this situation and its implication for pension arrangements and recommend solutions to ensure that the employment contracts of these nurses are regularised. “I expect this exercise will be completed by the end of December 2021,” he said. Imbert said he also proposed to finalise the arrangements for the daily rated pension plan in 2022.
Relief for businesses
Imbert announced a reduction in the tax rate by five per cent for significant exporters of local goods, the annual revenue of which is over $500,000, a measure which, he said, would benefit over 500 exporters and is estimated to cost $45.3 million. This would take effect from January 1, 2022 and would be reviewed after three years.
In order to boost digitisation, he said there would be a three year cap in the reduction in the tax rate by five per cent for small and medium companies whose core business, relating to technology solutions, digitisation and construction, is more than 50 per cent of annual revenues. He said if 1,000 such businesses use this measure, they can save $41,000 in taxes at a cost of an estimated $45.6 million. This measure will take effect on January 1, 2022 and would be reviewed after three years. New companies in the tech and digital sector, stand to benefit from a 50 per cent tax exemption on the first $100,000 of chargeable income for the first year and for the first $200,000 in the second year.
Imbert said to stimulate growth of the digital economy and in the quest to become a fully digitised environment, all duties and taxes on all remaining computer hardware, software and peripherals that are not yet tax free will be removed from January 1, 2022.
The Minister announced a tax holiday for the first five year period to new SMEs listing on the TTSE by granting tax exemption on Business levy and Green Fund levy and for the second five-year period, new SMEs will be taxed at 50 per cent of Corporation tax, business levy and green fund. This measure takes effect from January 1.
Merger of TTMF and Home Mortgage Bank
Imbert said the Government would move to restructure the HDC to make a clear distinction between its landlord function, as an owner and manager of rental accommodation, and its developmental function, as a builder of affordable houses for sale to the general public.
He said the Government had agreed to the merger of the Trinidad and Tobago Mortgage Finance Company Limited and the Home Mortgage Bank, creating in the process the Trinidad and Tobago Mortgage Bank.
“We intend to make an Initial Public Offer of the government shares in the new entity to further encourage public participation in the capital market. Barring unforeseen circumstances, the alignment of the operations of both entities is expected to be completed in the first half of fiscal 2022,” he said.
Government also intends to divest 10,869,565 ordinary shares in First Citizens Bank in a bid to raise approximately $550 million.
Imbert also announced incentives for first time homeowners increasing the tax allowance from $25,000 to $30,000 from January 1, 2022. There was also increased relief from $50,000 to $60,000 annually for taxpayers making contributions to approved retirement or pension fund plans.
Border security
The Minister also dealt with plans to enhance border security. He said the re-registration of Venezuelans had been completed with 13,800 submitting registration forms. The exercise has been extended to October 2021 for legal registration and the protection of registered Venezuelans.
With respect to agriculture, Imbert said he intended to allocate $300 million in the first instance to the Agriculture Stimulus Package Fund in the Ministry of Finance for fiscal 2022.
On the issue of WASA, Imbert said the task of repositioning WASA was very much on course. “The Board of Commissioners is in the final stages of completing a Transformation Plan to establish WASA as a modern technology-driven water management company that efficiently delivers water and wastewater services to the population,” he said.
Tax relief for purchases of electric cars
Government will remove all custom duties, motor vehicle tax and value added tax on the importation of battery powered electric vehicles with an age limit on imported used battery powered electric vehicles of two years from January 1, 2022.
However the Minister also announced an increase in the penalties for overweight trucks. The fines which are currently $750 will be increased to $8,000 from January 1,2022. He said the infrastructural damage to the nation’s roadways by overweight trucks continues to be a major concern.
Digital growth
Imbert said TT Wifi which provides free broadband access in highly populated and frequented areas, will continue to be expanded to all transport hubs, all libraries, all schools and at all health sites. Government in 2022 will introduce legislation to enable a National Digital Identity with all the necessary assurances and coverage to ensure the security and privacy of information exchanged.
The Digital ID would improve the management and issuance of social services grants and access to and provision of health services. He also spoke of the introduction of digital wallets to “speed up transactions, improve security and identify fintech opportunities”.
Strong economic recovery in 2022
The Minister also took aim at “uninformed commentators, misleading publicists and serial mischief-makers. He rejected the advice that T&T should enter into an IMF market based programme or access concessional financing. He said the general government debt ratio which had been rising since 2015, had now reached 84.8 per cent in September 2021 and is projected at 87.2 per cent in 2022.
“As we focus our efforts on continued fiscal adjustment and efficiency outturns from the operational and financial restructuring or State-owned enterprises, we expect the adjusted general government debt relative to GDP to begin a downward trend and remain at sustainable levels,” he said. “I look forward to a strong economic recovery in 2022 as major energy sector projects come online and the non-energy sector’s recovery takes root as socio-economic activity normalises in the post pandemic period,” Imbert stated.