Raphael John-Lall

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.