The economic structure remains in place | Local company

A national budget is, in a sense, nothing more than a snapshot of a country’s fiscal position and a short-term forecast of the future. It can also be seen as an opportunity for national reflection on longer-term trends and a focal point for discourse on what it would mean to shape a better future. From an economic point of view, certain structural problems remain a perennial feature of the landscape of Trinidad and Tobago, namely:

• We continue to depend on the energy sector;

• We spend more than we earn;

• Our national debt is increasing;

• We are exhausting our foreign exchange reserves (excluding external borrowing and the US $ 644 million of the IMF’s general allocation of special drawing rights at the end of August);

• Our global competitiveness is deteriorating.

Given the macroeconomic shock of Covid-19 and mandatory business closures, targeted counter-cyclical state intervention resulting in a budget deficit of $ 9.096 billion for fiscal year 21/22 was not unexpected.

This is particularly important in the service of the most vulnerable in society, as well as companies at the epicenter of the crisis. In many cases, these individuals and organizations have faced a sharp and continuing reduction in their livelihoods and are simply victims of circumstances.

Finance Minister Colm Imbert has tried to demonstrate the government’s empathy for small businesses and individuals by introducing a plethora of tax measures.

For companies, this was particularly to encourage exporters of local products and SMEs involved in technological solutions, digitization and construction.

To be effective, these measures assume profitability, which is far from certain during the post-Covid recovery period and is unlikely to be direct and forceful enough to save failing companies in the most affected sectors.

For these businesses, more immediately accessible and direct government assistance should be reconsidered. For individuals, the government has proposed downgrading basic groceries and further encouraging home ownership and retirement savings.

Main tax measures

The economic structure remains in place

A national budget is, in a sense, nothing more than a snapshot of a country’s fiscal position and a short-term forecast of the future. It can also be seen as an opportunity for national reflection on longer-term trends and a focal point for discourse on what it would mean to shape a better future. From an economic point of view, certain structural problems remain a perennial feature of the landscape of Trinidad and Tobago, namely:

• We continue to depend on the energy sector;

• We spend more than we earn;

• Our national debt is increasing;

• We are exhausting our foreign exchange reserves (excluding external borrowing and the US $ 644 million of the IMF’s general allocation of special drawing rights at the end of August);

• Our global competitiveness is deteriorating.

Given the macroeconomic shock of Covid-19 and mandatory business closures, targeted counter-cyclical state intervention resulting in a budget deficit of $ 9.096 billion for fiscal year 21/22 was not unexpected. This is particularly important in the service of the most vulnerable in society, as well as companies at the epicenter of the crisis. In many cases, these individuals and organizations have faced a sharp and continuing reduction in their livelihoods and are simply victims of circumstances.

Finance Minister Colm Imbert has tried to demonstrate the government’s empathy for small businesses and individuals by introducing a plethora of tax measures.

For companies, this was particularly to encourage exporters of local products and SMEs involved in technological solutions, digitization and construction. To be effective, these measures assume profitability, which is far from certain during the post-Covid recovery period and is unlikely to be direct and forceful enough to save failing companies in the most affected sectors.

For these businesses, more immediately accessible and direct government assistance should be reconsidered. For individuals, the government has proposed downgrading basic groceries and further encouraging home ownership and retirement savings.

Main tax measures

• Computer hardware, software and peripherals

The government had previously removed VAT, customs duties and tax on online purchases on certain specified hardware, software and computer peripherals. The Minister announced that as of January 1, 2022, the elimination of VAT, customs duties and tax on online purchases on all remaining hardware, software and computer peripherals that are not yet exempt from taxes. .

• VAT on basic food products

As of November 1, 2021, the list of basic food products that are zero-rated for VAT will be expanded to include products such as cookies, cooking oil, canned vegetables, cornflakes, canned fish, meat canned, curry, juice, sausage, ham, ketchup, bottled water and mat. The Minister indicated that an appropriate list of zero-rated items will be released shortly. In last year’s budget statement, the minister indicated the government’s intention to subject certain luxury food products to VAT. This measure is now implemented via Legal Notice n ° 246 of 2021 with effect from October 4, 2021.

• First-time home ownership allowance

In order to help low and middle income citizens, the minister proposed to increase the homeownership allowance from $ 25,000 to $ 30,000 per household.

While the Minister refers to mortgage interest paid in the year of income, it is important to note that the current allowance is unrelated to interest. This measure will apply to first-time buyers for five years from the date of acquisition and will take effect on January 1, 2022.

• Contributions to Approved

Effective January 1, 2022, it is proposed to increase the relief granted from $ 50,000 to $ 60,000 for contributions to an approved pension benefit plan or a registered pension fund plan, premiums paid in under a registered annuity scheme, contributions from individuals (under the Retirement Allowances (Legislative Service Act) and contributions to the national insurance scheme. This measure is expected to result in further tax savings for individuals contributing to these plans.

• Discounts on utilities

The T & TEC Bill Rebate program currently offers a 25 percent discount to T & TEC residential customers on bills of $ 300 or less. The minister proposed to increase the reimbursement from 25 to 35 percent. This would impact 210,000 households at an additional cost of $ 25 million. This measure will take effect on January 1, 2022.

The Minister also proposed to appropriately compensate the cost of water for the same group of households benefiting from the T & TEC rebate. However, the details of the said rebate will be disclosed in the 2021 finance bill.

The minister further indicated that it is expected that market-based tariffs for electricity and water will be introduced as recommended by the Regulated Industries Commission. He said the government will offer discounts to low-income and vulnerable groups as a first step and eventually introduce a utility charge card that allows these people to access subsidies for electricity and electricity. water.

Wade George is the executive

President of EY Caraibes.

Gregory Hannays is a partner of

tax services at EY Caribbean.

About Natalee Broderick

Natalee Broderick

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