Business leaders in south Trinidad are unhappy that the Government still has not managed to successfully provide foreign exchange for small and medium enterprises (SMEs) who need to conduct business and they believe it will impact them negatively.
Also, while they understand that the Government needs to raise revenue via taxes, they called on the Government to be more efficient in its tax collection.
Finance Minister Colm Imbert presented the mid-year budget review by way of Finance (Supplementary Appropriation) (Financial Year 2024) Bill, during the June 7 sitting of the House of Representatives at the Red House in Port- of-Spain.
Last week the Court of Appeal granted an order preventing the Government from implementing the T&T Revenue Authority (TTRA) until at least September 25.
In his affidavit, Imbert said the annual tax gap, that is the difference between actual tax revenue collected by the Government and potential tax revenue, is estimated to be more than $5 billion and could be as high as $10 billion.
President of the Penal/Debe Chamber of Commerce, Motilal Ramsingh told the Business Guardian that the affidavit of the Minister of Finance in support of the TTRA matter at the Court of Appeal is “sobering and worrying.”
“Moreso, since his hands are tied, in view of Justice Mohammed’s order in the Appeal, for literally the third and fourth quarters, which takes him to the end of the 2024 fiscal year, Mr Imbert has stated that his options for raising revenue are limited and the TTRA will enable him to increase revenue via more efficient tax administration, while he looks to increased oil and gas revenue in the future (2027).”
Ramsingh said the Finance Minister’s other options are to draw down on the Heritage and Stabilisation Fund (HSF) or borrow.
“The latter option will very likely affect credit ratings and at the same time increasing the use of already scarce FX to meet interest and principal payments when due.
“For large businesses, particularly in civil engineering and construction, large projects are limited. Their cashflows are restricted by the length of time the Government and its agencies take to settle invoices, which is ultimately passed on by them to smaller subcontractors. This ultimately affects disposable income to their employees in the communities and businesses (small and micro) who depend on paydays to get a boost in earnings.”
He also said that in Penal/Debe where the majority of businesses are largely in retail, distribution and construction, the effect on sales is becoming more pronounced as many have closed or reduced staff as overheads and unemployment are increasing. Those with incomes are becoming even more careful in their expenditure.
Ramsingh noted that Minister Imbert’s forecast of less revenue coupled with need to reduce or restrict expenditure is “quite telling.”
“This will lead to more caution on part of investors whether it be new or existing. The banks, as expected, will be more stringent in both issuing loans and the management of portfolios. We advise our members to take Mr Imbert’s affidavit seriously and plan their activities with this in mind, in addition, to the increased crime and other socioeconomic fall outs.
“We hope that both Government and the Opposition will work together and act responsibly with full knowledge of the facts and not inflame what will prove to be a difficult time. The Government need to be more equitable in their distribution of resources amongst all constituencies.”
Based on these factors, Ramsingh expects the shortage of foreign exchange to worsen.
“In view of the above, we anticipate that the foreign exchange situation will worsen with higher demand and more being sold on the black market. With our penchant for, and dependence on, imported goods, cost of living will certainly rise. In Penal and other communities, people are already migrating, especially young qualified persons.”
He asked the Minister of Finance to consider the cash basis for accounting for VAT and taxes as businesses are already suffering from significant cashflows problems yet are required to pay at the risk of significant penalties and interest if they are late.
“This is because of late payments by Government and clients who depend on Government for payments. In closing, we also would hope that the Opposition promises, of which no doubt will be an increase in expenditure, will be interrogated by the media on how they propose to finance their promises.
Siparia
President of the Siparia Chamber of Commerce, Emerson Cheddie told the Business Guardian that SMEs are pivotal to the local economy, fostering innovation, generating employment, and contributing to national expansion. Nevertheless, they encounter substantial obstacles in accessing foreign exchange facilities.
“The scarcity of foreign exchange facilities for SMEs is a notable issue that warrants attention. It is crucial for the Government to devise comprehensive solutions that cater to the distinct needs of SMEs. This will empower SMEs to actively participate in the local economy and contribute to its economic growth and development.”
He said the Government can facilitate SMEs in accessing forex facilities through various strategies and measures such as endorsing digitalisation to inspire SMEs to adopt novel technologies, including e-commerce sales channels, remote-work capabilities, enhanced internet access, and cashless payment systems.
“They can establish a supportive legal and regulatory framework and advocate recommendations to create a conducive environment for SME access to forex services. They can provide access to trade finance by collaborating with development partners to augment SMEs’ access to trade finance. This can encompass measures such as risk-sharing facilities and interventions that assist banks in providing forex credit to SMEs. By executing these strategies, governments can significantly enhance SMEs’ access to forex facilities, thereby enabling them to participate more robustly in the local economy.”
San Fernando
President of the San Fernando Business Association, Daphne Bartlett, told the Business Guardian that it is the small business sector that drives the economy and she does not understand why the Government is not doing more to make foreign exchange more accessible to SME’s.
“Recently, we saw from the Auditor General’s report, many contracts were given out without any accountability. This is very alarming. We always had a feeding frenzy at the trough for party supporters. We are trying to complete the Waterfront Project on the King’s Wharf in San Fernando. When the Government closed down Petrotrin it created unemployment in many sectors. Surely some of these contractors in South would have welcomed a little work! I personally would like to get an answer from our Prime Minister since when I chaired that project in 2014, I insisted that the work must be given out to Southerners.”
She lamented that it is the big business sector that has access to foreign exchange and the Government must prioritise its distribution to all sectors including the SME’s.
“The big ‘buy and sell’ businesses get most of the forex which they don’t earn. Why are so many new cars on the road? Why do we have so many unnecessary items on the shelves? The country needs to start a buy local campaign. Look to diversify in the tourism and agricultural industry. Let’s try to eat what we plant and plant what we eat.”
While she acknowledged the attempts of the Ministry of Finance to get the business community and citizens in general to pay taxes, she pleaded with the Government to tax those who can afford it.
“Notice no building taxes were introduced for these large commercial buildings who can really afford hefty taxes.
“We are not in a good place. Too many homeless and unhappy people around. I am very unhappy about that. This became very evident when the refinery was closed. People lost their jobs and couldn’t pay their rents and feed themselves. Open back the refinery and let it operate as we used to with some adjustments,” said Bartlett.
