Colm Imbert Budget Update

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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.

This contrasts with revenues of $60.2 billion and expenditure of $63 billion, in the budget presented last October.

“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.

Some URP labour will be directed to food production, he told Parliament. He also promised a review of GATE, with changes in the next budget package. GATE currently costs $600 a year, the Finance Minister said.

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.

All Clico assets – including its shares in Republic Bank – will be divested by 2017, he announced.

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 corporate sector paid $1 billion less than projected, Imbert added.
He said the Board of Inland Revenue will be strengthened to collect and remit taxes on a timely basis.

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.

Interchanges will be installed along the Churchill-Roosevelt Highway, Imbert said, and multi-storey car parks will be built.
He pegged the budget at US $37 a barrel of West Trade Intermediate oil and gas at US $2 an mmbtu.
Certain short-term loans are being re-negotiated, Imbert said.
He also revealed plans to expand the International Financial Centre (IFC) by introducing a Chinese bank.
Generally, he promised to keep “tight control on spending.”
The Minister said that the reformed fiscal measures for oil exploration had served their purpose and they will be revised.
He added that similar reforms are planned as incentives for manufacturers.
Without providing details, he said there will be grants for projects in urban renewal and rural development.
Imbert also said projects are planned in maritime, industries and other sectors in order to diversify the national economy.
He stated that the dump will be removed from the Beetham Highway and that recycling projects will be introduced.

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