It must be admitted up front that constructing a budget with a $20 billion fall in revenue must have been a most challenging exercise for Minister of Finance Colm Imbert and his team of technocrats at the ministry.
That there had to be a reduction in expenditure, the move down from the original $63 billion package of expenditure in 2015-2016 budget to $53.4 billion for 2016-2017, was inevitable. So Minister Imbert sliced off elements of the social welfare programme, Cepep and URP, the GATE programme, reduced expenditure on national security and there were cuts in the budget for Tobago. However, we need to wait to see where the cuts in national security will come from.
Commendably, though, the Finance Minister has made provisions within his wide-ranging cuts in transfers to support people at the lower end of the income scale. Government subsidies on electricity bills and promised means testing to determine which home owners will not be able to afford property taxes are among such considerations.
On the other side, the increase in taxes at the individual and company levels for persons and companies earning above $1 million annually is one which cannot be argued with. As usual, it was almost certain that consumers of tobacco and alcoholic products would have been called upon to pay for their habits.
Of some significance is the intention of the minister and Government to make good on the promise to establish the Revenue Authority as an institutional mechanism to make tax collection more efficient. So too, is expecting that the agency will be able to prevent the leakage of taxes, inclusive of preventing corporations from transferring tax liability from T&T to other parts of their operations. It is of great concern, though, that there will still be a $6 billion deficit between expenditure and revenue. The continuing budget deficits have increased the national debt to over $80 billion and carried debt servicing to over 60 per cent of the country's gross domestic product. It may not yet be deeply troubling but the fact is that it is continuing to increase.
It was a good decision to continue selling shares in profitable state enterprises such as Phoenix Park and First Citizens.
On the other side of the ledger, the minister announced a few encouraging measures and projects which could begin to replace portions of the lost revenue from oil and gas. The Tobago Sandals Resort and construction of a new airport in Tobago while the ANR Robinson International Airport is being renovated are useful projects to encourage growth of tourism and create meaningful jobs which could link other segments of the economy.
As previously announced, Government is in the process of restarting the road infrastructure networks and is expected to recover $1 billion from the Pt Fortin Highway from the Brazilian firm OAS Construtora.
Inevitably, though, Minister Imbert is pinning hopes on the revival of exploration and production in gas, oil and petrochemicals. A review of the Special Petroleum Tax with technical assistance from the International Monetary Fund will no doubt be crucial to encouraging large energy corporations to boost their activities.
However, missing from a number of the projects to revive the economy and the hoped for return to growth by 2018, are specific time frame and a structured plan.
One very important signal from the Minister's presentation is that Government could be seriously beginning to start the dismantling of the welfare state the whole country has been locked into for decades.