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Monday, February 24, 2025

Imbert: Energy sector tax legislation coming soon

by

Peter Christopher
145 days ago
20241002
Economist Dr Marlene Attzs chats with Finance Minister Colm Imbert during the TTMA’s Post Budget Presentation at the Hyatt Regency Hotel, Wrightson Road, Port-of-Spain yesterday.

Economist Dr Marlene Attzs chats with Finance Minister Colm Imbert during the TTMA’s Post Budget Presentation at the Hyatt Regency Hotel, Wrightson Road, Port-of-Spain yesterday.

ABRAHAM DIAZ

Se­nior Mul­ti­me­dia Re­porter

pe­ter.christo­pher@guardian.co.tt

Leg­is­la­tion geared to­wards in­creas­ing the amount of US dol­lars paid to the Gov­ern­ment by en­er­gy sec­tor com­pa­nies is set to come in­to ef­fect by ear­ly 2025.

This was an­nounced by Fi­nance Min­is­ter Colm Im­bert dur­ing a pan­el dis­cus­sion at the Trinidad and To­ba­go Man­u­fac­tur­ers As­so­ci­a­tion’s (TTMA) Post Bud­get Dis­cus­sion at the Hy­att Re­gency in Port-of-Spain yes­ter­day.

The Fi­nance Min­is­ter ex­plained that the coun­try was cur­rent­ly miss­ing out on ap­prox­i­mate­ly US$2 bil­lion an­nu­al­ly from en­er­gy sec­tor com­pa­nies. Dur­ing the bud­get, the Fi­nance Min­is­ter said by 2025 he would in­tro­duce leg­is­la­tion to en­cour­age en­er­gy sec­tor com­pa­nies to pay all their tax­es in US dol­lars, giv­en all of their prod­ucts are ex­port­ed.

“I made a state­ment in the bud­get, and I want to ex­plain why I did it. We earn about $28 bil­lion in a good year from the en­er­gy sec­tor in T&T. We are sup­posed to get about $28 bil­lion in terms of en­er­gy tax­a­tion. Now, if you do the math, that’s about four bil­lion US dol­lars more or less: $26, 27, 28 bil­lion TT is four bil­lion US, but the amount that we ac­tu­al­ly re­ceive is on­ly $2 bil­lion. So there’s a miss­ing two bil­lion some­where,” said Im­bert.

“So what the en­er­gy com­pa­nies are do­ing is they’re con­vert­ing US out­side of the gov­ern­ment sys­tem. That doesn’t make any sense, be­cause if you’re a pro­duc­er of oil or a pro­duc­er of petro­chem­i­cals, all your prod­ucts are ex­port­ed, and all of them are go­ing to gen­er­ate for­eign ex­change in terms of rev­enue for the com­pa­ny.

“So I said to my­self, rather than try and fig­ure out what’s go­ing on here, why is it we’re on­ly get­ting two bil­lion out of the four bil­lion re­port­ed be­fore? Are we go­ing to en­cour­age them to pay more on their tax­es in the US?”

Im­bert said that leg­is­la­tion should add US$2 bil­lion to the lo­cal econ­o­my; how­ev­er, he ex­plained there would still be a need for a fur­ther in­jec­tion of for­eign ex­change even when this leg­is­la­tion comes in­to ef­fect.

“The in­jec­tion is still re­quired, but we could send more mon­ey through the Ex­im Bank be­cause that is a struc­ture-fo­cused sys­tem that’s work­ing so that the for­eign ex­change will then go to the pro­duc­tive sec­tor,” said Im­bert.

Econ­o­mist Dr Mar­lene Attzs im­me­di­ate­ly asked him when the leg­is­la­tion would like­ly come in­to ef­fect, to which he said, “Three to four months. Peo­ple are work­ing on it al­ready.” For­mer fi­nance min­is­ter Karen Nunez-Tesheira said she sup­ports the move giv­en the sig­nif­i­cant chal­lenges to ac­cess­ing for­eign ex­change lo­cal­ly.

“A lot of the in­ter­na­tion­al en­er­gy com­pa­nies did; they bought up a lot of the VAT bonds, and then in­stead of hav­ing to change a lot of the US dol­lars to pay their lo­cal debts, they sold their bonds to the banks, and there­fore we’re able to save the US cur­ren­cy and use the lo­cal cur­ren­cy to do that. So I guess that’s one of the things he wants to ad­dress; I sup­port it. We need for­eign ex­change,” said Nunez-Tesheira in an in­ter­view with Guardian Me­dia im­me­di­ate­ly af­ter the pre­sen­ta­tion.

The avail­abil­i­ty of for­eign ex­change has been a re­cur­ring is­sue with busi­ness own­ers as well as the wider pub­lic rais­ing con­cerns about the lim­it­ed avail­abil­i­ty of for­eign cur­ren­cy.

Over the past two years, sev­er­al com­mer­cial banks have ad­just­ed their US spend­ing lim­its down­ward on cred­it and deb­it cards amid the lim­it­ed sup­ply of for­eign ex­change. 


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