The word is out and most residents would know by now that the government of Trinidad and Tobago has presented their mid-year budget. We caught up with Economist N. Alexander of the Ministry of Trade and Industry who gave us some insights into these measures and potential implications for entrepreneurs.
The theme of the 2015/2016 Mid-Year Budget Review was “Restoring Confidence and Rebuilding Trust”. How did the review address this theme?
CONFIDENCE BUILDING MEASURES
- Alexander said that there were a few measures in the review that could be considered confidence building. These include reduction in taxes on maxi taxis and taxis and the removal of all taxes on electric, hybrid and CNG vehicles with engine sizes 1999 cc and below. While the specifics on the above are to be finalized, he says this move is nevertheless a welcoming one, similar to the October 2015 Budget initiatives that reduced VAT to 12.5% and increased the non-taxable personal income allowance from 60k to 72k.
“Together these measures put more income into consumers’ hands and make it more attractive for those wishing to get into public transportation services. Small businesses or individuals now also have more affordable options when purchasing a vehicle,” Alexander says.
- Also encouraging was the decision to continue the existing tax incentives available to individuals desirous of constructing commercial buildings and/or multi-story car parks have been extended to 2025. Tax incentives are also to be implemented for those constructing multi-family residential buildings. This is another way to encourage existing and new entrepreneurs to invest in a worthy ideal so as to create a steady stream of income for themselves, others and by extension the economy.
- He explained that further tax incentives are to be developed for those engaged in agri-processing. This is a great incentive for local farmers and entrepreneurs to grow and process more food, thereby lowering the import bill and reducing the need for foreign exchange.
- In addition to the above, the government has signaled that it intends to take action to ensure that the foreign exchange rate does not move beyond 3.3% of the current level. This is reassuring news as it offers some level predictability to aid planning and projection as the rate may note move beyond TTD6.8 to USD1 in the near future. It is uncertain however whether this will alleviate the difficulties still facing many in accessing USD currency.
- Other good news worth mentioning were the measures that were not changed. This includes cooperation and income tax rates, tax penalties, Financial Services tax rates and the like.
NOT SO CONFIDENT MEASURES
- The imposition of a 7% levy on online purchases of goods and services from non-resident vendors or companies not taxable in Trinidad and Tobago. “This measure is not revenue generating, but rather to discourage foreign exchange usage. It has the potential of seriously impacting on the survival of many small business operators dependent on online commerce.” Alexander says. The measure is to take effect from September 2016.
- Customs Duty and Motor Vehicles Tax for private vehicles with engine sizes exceeding 1999 cc to be increased by 50% immediately. This is another non-revenue generating initiative that aims to discourage foreign exchange usage in the immediate future.
- Super gasoline and diesel fuel to increase by 15% each. This one measure will impact across all sectors to increase the cost of doing business and the final price paid by the consumer. In some cases, this may make some businesses less competitive and erode profits.
- Land and Buildings Taxes to be reintroduced at 2009 levels. This may represent an additional burden to individuals and businesses that have not incorporated this expense into the affairs over the last few years.
Hope this helps! As usual, feel free to share and shoot us a comment below and let us know if you found this blog post useful!
Until next time.
T&T’s Entrepreneurs Team.
Photo Credits: LoopTT , CNC3 , Invest TT