The T&T Man­u­fac­tur­ers’ As­so­ci­a­tion (TTMA) has is­sued an ur­gent call for gov­ern­ment in­ter­ven­tion, warn­ing that chron­ic de­lays in Val­ue Added Tax (VAT) re­funds are paralysing key sec­tors of the na­tion­al econ­o­my.

While VAT is de­signed to be a tax-neu­tral mech­a­nism—where busi­ness­es col­lect rev­enue for the state and off­set it against in­put costs—the TTMA re­ports that the sys­tem has ef­fec­tive­ly bro­ken down.

For many man­u­fac­tur­ers, par­tic­u­lar­ly those in the food and bev­er­age, house­hold prod­ucts and print­ing and pack­ag­ing sec­tors, the Gov­ern­ment’s fail­ure to is­sue prompt re­funds has trans­formed a neu­tral tax in­to a crush­ing fi­nan­cial bur­den.

In a re­lease is­sued yes­ter­day, TTMA said re­cent feed­back from its mem­ber­ship in­di­cat­ed that re­fund de­lays are no longer mea­sured in weeks, but in years.

“Ex­tend­ed de­lays, of­ten ex­ceed­ing a year, and in some cas­es span­ning sev­er­al years, turn it in­to a de fac­to cost which ef­fec­tive­ly be­comes a fi­nan­cial bur­den for busi­ness­es. TTMA mem­bers re­port mul­ti­ple out­stand­ing claims, lock­ing up vi­tal work­ing cap­i­tal that should be re­turned to sup­port op­er­a­tions and growth,” it ex­plained.

The re­lease not­ed that a com­pre­hen­sive sur­vey of TTMA mem­bers high­light­ed a cas­cad­ing se­ries of eco­nom­ic con­se­quences stem­ming from the liq­uid­i­ty crunch:

• Cash flow strain: de­layed re­funds lim­it the work­ing cap­i­tal com­pa­nies need to meet pay­roll, pay sup­pli­ers, ser­vice debt, main­tain pro­duc­tion, and sup­port ex­port ac­tiv­i­ty.

• In­creased bor­row­ing: many firms are forced to re­ly on ad­di­tion­al loans or over­draft fa­cil­i­ties to man­age liq­uid­i­ty gaps, in­creas­ing fi­nanc­ing costs and plac­ing pres­sure on al­ready tight mar­gins.

• De­layed in­vest­ment: un­cer­tain­ty around re­fund time­lines has caused busi­ness­es to post­pone equip­ment up­grades, mod­erni­sa­tion projects, and ex­pan­sion plans.

• Op­er­a­tional ad­just­ments: some com­pa­nies have had to scale back pro­duc­tion or de­lay growth ini­tia­tives while man­ag­ing fi­nan­cial strain.

• Ex­port con­straints: ex­port man­u­fac­tur­ers face ad­di­tion­al chal­lenges as de­layed re­funds lim­it their abil­i­ty to pur­chase raw ma­te­ri­als and ful­fil in­ter­na­tion­al or­ders.

• Sup­ply chain ef­fects: cash flow pres­sures can rip­ple through the sup­ply chain, af­fect­ing small­er sup­pli­ers and slow­ing broad­er eco­nom­ic ac­tiv­i­ty.

Com­pound­ing these chal­lenges, the TTMA said, is the lack of pre­dictable time­lines or con­sis­tent com­mu­ni­ca­tion re­gard­ing the pro­cess­ing of re­fund claims, adding that this un­cer­tain­ty makes fi­nan­cial plan­ning dif­fi­cult and un­der­mines busi­ness con­fi­dence.

The TTMA is ad­vo­cat­ing a com­plete over­haul of the re­fund process to en­sure ef­fi­cien­cy, trans­paren­cy and pre­dictabil­i­ty as it main­tained that a func­tion­al VAT sys­tem is not just a mat­ter of ac­count­ing, but a pre­req­ui­site for na­tion­al eco­nom­ic sta­bil­i­ty and ex­port growth.

The TTMA’s pres­i­dent is Dale Par­son, who is the man­ag­ing di­rec­tor of the Kalei­do­scope Group.