DETAILED ACTION PLAN NEEDED FOR NEW FISCAL YEAR
As the Government prepares for the presentation of the 2016/2017 national budget, the American Chamber of Commerce of Trinidad and Tobago (AMCHAM T&T) acknowledges that the past fiscal year presented various challenges for the country and the Government. We appreciate what we view as incremental attempts to curtail spending while balancing economic growth and social stability, in the context of a drastic fall in energy prices.
In the upcoming 2016/2017 budget, AMCHAM T&T believes that the Government should engage in revenue generating measures and pursue aggressive structural reform geared towards cost-cutting and operational efficiency. A detailed plan, with specific action, is needed to address inter alia, institutional strengthening, improvements in the business environment, enhanced public sector efficiency, greater transparency in public procurement and facilitation to sectors which can provide future growth.
Some measures that AMCHAM T&T would like to see addressed in the 2016-2017 National Budget are as follows:
- As the country’s major income earner, we believe that the Government should have a more modest budgeted oil price of no more than US$35 per barrel, and maintain budgeted gas price at US$2.00 per mmbtu.
- Given the current price environment, the Supplemental Petroleum Tax being applicable at prices of US$50 a barrel and higher is not appropriate.
- There should be a review of the margins afforded to petroleum dealers, peddlers, and retailers – In the context of a heavily price regulated industry where pricing structures have been stagnant for over a decade, the Government should consider the margins afforded to petroleum dealers, peddlers and retailers and the implementation of a mechanism to calculate these margins based on the local environment.
Increase Accountability And Efficiency For A More Favourable Business Environment
- Rationalize expenditures across all areas of Government spend and operationalize Procurement Legislation to further this objective.
- Prioritize VAT refunds and correct inefficiencies in the Administration of VAT, which would allow for more efficient collection and refunds.
- Improve the effectiveness and efficiency of Tax administration. This includes: the approval process for exemption on severance payments; Severance Benefit approval; and revisiting of fees for tax clearance certificates and other documents. Establish the Revenue Authority and ensure it is adequately staffed and empowered to effectively collect taxes which are due to the GORTT. A timeline for the implementation of the Revenue Authority should be identified.
- Promote investor facilitation by fast tracking projects over $250Million and/or the creation of 50 plus permanent jobs.
- Revisit and revamp the Venture Capital regime to improve its attractiveness and allow for consultation on the draft legislation.
- Operationalize the Government’s Public-Private Partnership Unit and actively pursue this area for key developments going forward.
- Prioritize transfer pricing legislation – As we continue to look at international best practice with a focus on international trade and attracting foreign investment, transfer pricing regulation becomes increasingly important.
AMCHAM T&T also believes that there must be some urgency in articulating a plan of public debt management, as the ballooning of Government to Government financing arrangements and the overdraft utilization at the Central Bank of Trinidad and Tobago over the last several years and the apparent absence of these numbers from our external debt position are alarming. AMCHAM T&T is concerned about the overall quantity of public debt and the absolute size of the obligations that the country can comfortably service in years to come.
AMCHAM T&T is aware of the difficult position in which the Government finds itself given the steep, sudden decline in revenue and the structural inefficiencies which have been developed over decades. We know that a return to sustainable growth will require a collective effort. We continue to encourage the Government to engage all stakeholders, and we reiterate that we remain willing to work with the Government and other stakeholders whenever needed.