Former energy minister Conrad Enill has accused another former energy minister, Kevin Ramnarine, who served in the People's Partnership Government, of playing politics with the nation's revenue, costing the treasury billions.
Speaking at Eastern Credit Union's Post Budget discussion at La Joya Complex, St Joseph, Enill said Ramnarine adjusted fiscal incentives for producers in the upstream industry without implementing proper policies and this created problems for the economy.
"When you decide that you are going to incentivise the upstream people–those who have to produce–what happens is that you give away a lot of your resources. So for example, the minister of energy in 2012 decided that he was going to incentivise the upstream (industry). In doing that, it meant that for every US$1 that we got from investment, it cost him US$1.50.
"So while on one hand he was saying that I got the most amount of investment in the last 20 years, what he didn't say was that it basically cost him that difference up by 150 per cent. And, multiply it by 55 per cent, because we tax on this part of the value chain," he said.
Enill said while this loss can be directly attributable to falling oil prices, it is also due to a change in the policy environment.
He added: "This is not the first time we've had a price issue. We had a price issue in 2008. Nobody knew. It was worst than this. So the issue therefore is policy matters, and I think the whole conversation that we are going to have on budget debate going forward is policy.
The former minister said T&T is currently faced with $63 billion in expenses and revenue of $40 billion.
"That's what we get as far as our productive capacity is concerned. We are going after dividends from NGC and a couple other people. That's going to give us $8 billion this year. We're selling some things. We're going to get $9 billion. We're borrowing some money. That's another $6 billion."
Enill said that is likely to be the lifestyle of citizens until March 2016 when Finance Minister Colm Imbert gets "the real story on the economy" and by then some things will have to change. He estimates that revenue would be less, dividends would pay less, while borrowing could be more, so it is necessary for citizens to understand the country's economic reality and prepare no matter what the outcome.
Delving further into the dynamics of revenue from the energy sector, Enill said T&T will collect $14 billion less from energy companies next year, compared to just two years ago.
"In a real sense, therefore, your lifestyle was being funded by energy companies. The question now is, do we allow our future generations to continue to fund our lifestyle, by borrowing $20 billion (a year) to support that, or should we pay for our own lifestyle by paying $5 for gas instead of $1.75?" he asked
"That's one of the questions. But we didn't have to get to this stage, because the problem was not only price. The problem was two other issues–production and fiscal incentives–that is a function of policy choice. This is where you make the bad choice in policy because you want to play politics," he said.
Enill added: "I want you to understand this. Tax revenue in this country comes from four sources: income and profits, goods and services, international trade and a little something that we grab here, there and everywhere. This is how the productive capacity in the country, when incentivised, responds. We basically run this country on taxes. So it is a good thing that we pay taxes.
"I love it when businesses do well. The more taxes we get, the more we can spend. The problem with this is cash flow timing and therefore payments. It means that when the oil companies do not give you the receipts for you to make your $5 billion a month payment, it means you have to go and borrow again, you have to go and get dividends and you have to use the Central Bank overdraft which as we know today is 98 per cent."