DA­REECE PO­LO

Se­nior Re­porter

da­reece.po­lo@guardian.co.tt

A for­mer gov­ern­ment min­is­ter says it is not sur­pris­ing that the Gov­ern­ment may be con­sid­er­ing in­tro­duc­ing tax­es to bal­ance the sheets af­ter record­ing a sig­nif­i­cant de­cline in oil and gas rev­enue.

For­mer fi­nance min­is­ter Karen Nunez-Tesheira, who was a mem­ber of the rul­ing Peo­ple’s Na­tion­al Move­ment (PNM), said yes­ter­day that while the Gov­ern­ment has de­nied Op­po­si­tion leader Kam­la Per­sad-Bisses­sar’s claim a Val­ue Added Tax (VAT) in­crease is on the hori­zon, it should be ex­pect­ed Gov­ern­ment will weigh its op­tions to raise rev­enue and this will in­clude po­ten­tial­ly in­tro­duc­ing lo­cal tax­es.

She said T&T is in a dire po­si­tion in terms of for­eign ex­change and pro­ject­ed rev­enue earn­ings, which means Gov­ern­ment is forced to brain­storm ways to make mon­ey while con­sid­er­ing the so­cial and po­lit­i­cal im­pact of its de­ci­sions.

“I sus­pect they may be con­sid­er­ing in­creas­ing the VAT on cer­tain, what you call, high-end prod­ucts. The ones where you’re look­ing at, not the every­day prod­uct, and when I say every­day, every­day mid­dle-class prod­uct. I don’t think she’s (Per­sad-Bisses­sar) on the right track to say that they are in­creas­ing VAT. I don’t know that she has the Cab­i­net note that says that.”

She, how­ev­er, sug­gest­ed that the doc­u­ment Per­sad-Bisses­sar claims to be a Cab­i­net note in her pos­ses­sion is more like­ly a doc­u­ment from the Fi­nance Min­istry, based on Fi­nance Min­is­ter Colm Im­bert’s counter-ar­gu­ments. Nunez-Tesheira de­scribed such doc­u­ments as a nor­mal part of min­istry ac­tiv­i­ty.

Asked if she felt a VAT in­crease should be con­sid­ered, she said she nev­er be­lieved the Gov­ern­ment would earn $54 bil­lion as first pro­ject­ed when the bud­get was pre­sent­ed in Oc­to­ber 2023. She said this is be­cause of the un­pre­dictabil­i­ty of the en­er­gy sec­tor. How­ev­er, she con­sid­ers the po­ten­tial tax­a­tion of busi­ness­es and high-end goods to be a nec­es­sary evil.

“I agree with what they’re do­ing. They have to do it. They’ve got to do it; it needs to be done and they need to be more ag­gres­sive with the Rev­enue Au­thor­i­ty and even with the cur­rent Board of In­land Rev­enue and Cus­toms. The Gov­ern­ment has no choice, that is very clear to me,” she said.

How­ev­er, po­lit­i­cal sci­en­tist Dr In­di­ra Ram­per­sad yes­ter­day said it was “fool­hardy” of the Gov­ern­ment to think of this method, cau­tion­ing them on the ef­fects it will have on gen­er­al elec­tions due next year.

Dr Ram­per­sad said when the bud­get was pre­sent­ed in Oc­to­ber, it was pegged at $85 a bar­rel. She said oil prices may have teetered be­low that, but were not sig­nif­i­cant enough to ex­plain the “lu­di­crous” $9 bil­lion rev­enue short­fall that led to the $2.3 bil­lion sup­ple­men­ta­tion of the 2024 bud­get.

She al­so urged the State to stream­line its tax col­lec­tion and tax re­turn process­es be­fore con­sid­er­ing new tax­es.

“A lot of peo­ple are com­plain­ing about not re­ceiv­ing their VAT re­im­burse­ment – that is the busi­ness sec­tor and in­di­vid­u­als in the so­ci­ety. So that is al­so mon­ey owed to peo­ple,” she said.

“To go now and in­crease tax­es in what­ev­er way, whether it’s VAT, whether it’s in­come tax or cor­po­ra­tion tax... if they want to in­crease the busi­ness sec­tor/cor­po­ra­tion tax, that may not af­fect the peo­ple but they can’t come and tax the small busi­ness­man, small-medi­um busi­ness en­ter­pris­es, nor the in­di­vid­u­als in the so­ci­ety. To come and fur­ther tax the pop­u­la­tion will just lead to added dis­gruntle­ment.”

She said the Gov­ern­ment may be hop­ing the pop­u­la­tion for­gets this is­sue but said this could cost them the elec­tion.

“Our peo­ple prob­a­bly are not the most vi­cious pro­test­ers but they do make state­ments at the polls. So there are silent ways to protest and there’s an ac­tive way to protest and while they ent ri­ot yet, it does not mean that they are swal­low­ing it. So, I think they have to be care­ful,” she stat­ed.

Mean­while, econ­o­mist Dr Vaalmi­ki Ar­joon not­ed that while tax­es are nec­es­sary, T&T is not get­ting val­ue for mon­ey. He there­fore called for a bal­ance to be struck be­tween tax­a­tion lev­els and the ef­fec­tive util­i­sa­tion of pub­lic funds, as he em­pha­sised the Au­di­tor Gen­er­al’s re­port which sug­gests a de­gree of in­ef­fi­cient spend­ing, over­spend­ing and wastage of pub­lic funds.

He al­so warned that high­er tax­es will have dis­as­trous ef­fects on the econ­o­my, as it will re­duce con­sumer spend­ing and busi­ness prof­itabil­i­ty, which will ul­ti­mate­ly im­pact peo­ple’s abil­i­ty to pay tax­es.

“The ob­jec­tive of high­er tax­es may be to low­er the bud­get deficit and re­liance on debt, but this may have un­in­tend­ed re­verse con­se­quences, as ag­gres­sive forms of tax­a­tion low­er con­sumer spend­ing and busi­ness prof­itabil­i­ty, which lessens their abil­i­ty to pay tax­es and at the same time, re­strict eco­nom­ic ac­tiv­i­ties which is harm­ful for growth,” he said.

“Now that we’ve re­turned to a pos­i­tive growth tra­jec­to­ry of 1.48% in 2022 and 2.1% in 2023, it is quite pos­si­ble that any hy­po­thet­i­cal in­crease in tax­es or in­tro­duc­ing new tax­es could jeop­ar­dise our fu­ture growth po­ten­tial, how­ev­er mar­gin­al it may be,” he con­tend­ed.

Ac­knowl­edg­ing the un­like­li­hood of a tax in­crease in the short term giv­en loom­ing gen­er­al elec­tions, Dr Ar­joon said Gov­ern­ment should be cog­nisant that this will lead to a re­duc­tion in dis­pos­able in­come amid ris­ing costs. This, he said, will al­so hurt the busi­ness sec­tor.

He said Gov­ern­ment would be bet­ter off plug­ging the gaps in tax col­lec­tion.