Higher cost of living and fewer public projects have been unveiled by Finance Minister Colm Imbert, in one of the toughest fiscal packages in two decades.
“The new normal” is how Imbert branded the struggling Trinidad and Tobago economy, in which revenues for the current fiscal year have been adjusted downward to $44 billion and spending at $59 billion.
“We have to cut our cloth to suit our measure,” the Minister said in an 88-minute mid-year budgetary review to the House of Representatives Friday.
In arguably his toughest measure, Imbert cut the fuel subsidy and jacked up the cost at the pump for diesel and super premium by 15 per cent each.
He said the annual fuel subsidy is now $600 million. He hinted at further fuel price increases, following proposed consultations. The subsidy is disproportionately assisting the rich, he stated. In a counter measure, he removed all taxes on the purchase of CNG, electric and hybrid vehicles and promised to put more public transportation vehicles on the road.
The Minister also announced increased taxes on the purchase of luxury vehicles and on alcohol and tobacco. In another measure aimed at consumers, Imbert unveiled a seven per cent tax for online purchases.
That means that people who purchase items through the internet will be taxed for the first time.
He stated that the move was aimed at reducing revenue leakage (US $1 million a day, he revealed) and assisting local manufacturers.
The Minister said there would be reduced spending on URP and CEPEP, which, he revealed, totalled $1.5 billion last year.
Only three of 250 gaming clubs (casinos) currently pay taxes, he stated, and concerted efforts will be made to improve revenue collection.
Imbert forecasted that there be 15 per cent deficit budgets up to 2018, following which the annual shortfall will be reduced to10 per cent.
He stated that expenditure will be cut by 2018 if energy revenues are not increased.
He said the deficits will be funded by borrowings, by one-time sale of Clico assets and revenues from Initial Public Offerings of State enterprises and by dipping into the Heritage and Stabilisation Fund (HSF).
The country had met the threshold to utilise the fund, the Minister stated.
He blamed the tough economic times on reduced energy revenues, saying that $3 billion less was collected from the sector for the first half of the fiscal year.
The Minister said the country cannot afford the costly mass transit project at this time, but he unveiled plans for infrastructure ventures.
Those projects will include completing the San Fernando to Point Fortin Highway, construction of a highway from Wallerfield to Manzanilla and another from San Fernando to Princes Town.