The 2017 Mid-Year Budget Review – Part Three

29 May 2017

A Firstline Securities Limited Blog by: Mike

On the 10th May 2017 Trinidad and Tobago’s Minister of Finance, Colm Imbert, presented his 2017 Mid-Year Budget Review. In this third blog entry in a series of three we discuss the issues that appear to have dropped off the Minister of Finance’s radar as they were not mentioned in the 2017 Budget Review.


The Minister steered clear of mentioning the issue of crime and introduced no new initiatives aimed at tackling a problem that hinders the development of Trinidad and Tobago economically and socially.

Progress in respect of Transfer Pricing

During the 2017 National Budget Presentation, the Minister stated that illegal pricing arrangements have become a major source of tax evasion all over the world, with the problem being especially prevalent in commodity producing countries like Trinidad and Tobago, where vertically integrated companies are able to shift profits from host countries into lower taxed jurisdictions.

The Minister stated that since 2011 it is estimated that at least US$1.4 billion annually has been lost by Trinidad and Tobago through the diversion of natural gas sales to higher priced markets through “unbalanced off-taking contracts.”

The Minister gave no progress update on the initiatives being developed to counter this problem.

Impact of the 7% online tax

The 7% online tax came into effect on the 19th October 2016. The Minister did not mention the tax and so it is not possible to assess the effectiveness of the tax either as a contributor to government revenue or as a disincentive to buy foreign goods and consume foreign exchange.

Sale of other assets including Lake Asphalt and eTecK

The 2017 National Budget mentioned several assets earmarked for disposal. While Trinidad and Tobago NGL Limited (TTNGL), First Citizens, and Trinidad Generation Unlimited were all mentioned by the Minister in the 2017 Review, an update was not given in respect of the Evolving Technologies and Enterprise Development Company Limited (eTecK) or Lake Asphalt.

During the 2017 National Budget, the Minister announced the intention to sell 50% of eTecK which was expected to generate TT$500m, and Lake Asphalt was earmarked for partial divestment to a strategic partner who would be able to successfully market and diversify Lake Asphalts product lines.

Progress in respect of the Public Private Partnership

During the 2017 National Budget presentation, the Minister announced that over the next four years, utilising a PPP approach, the government will provide 50% tax relief together with other incentives appropriate to the nature of the investment to businesses that can mobilise private sector funding to provide public infrastructure and public facilities, amenities, and services. The system for providing these tax reliefs and incentives was expected to be in place by the end of the first half of financial year 2017.

The Minister gave no update in respect of these initiatives or incentives.

The Entrepreneurial Talent Grant (ETG)

During the 2017 National Budget, the Minister announced the launch of an Entrepreneurial Talent Grant. Under the auspices of this grant, citizens are invited to present innovative business ideas on an annual basis for evaluation by a panel of accomplished businessmen and entrepreneurs. The top five projects each year would be awarded $1m grants to facilitate the development and implementation of their business concepts.

Progress in establishing the ETG was not mentioned by the Minister.

The impact of new incentives to boost exports

The 2017 National Budget introduced initiatives aimed at boosting the exports of Trinidad and Tobago and earning additional foreign exchange. These initiatives included:

  • The creation of a US$ 10 million revolving loan facility by the EXIMBANK of Trinidad and Tobago to assist exporters to access new markets. This facility was introduced in 2016 and is to be extended in scope during 2017.
  • The establishment of Special Economic Zones that will replace the current Free Zones operating in Trinidad and Tobago under the Free Zones Act.
  • The establishment of Agro-Processing Parks in Moruga and Wallerfield and other areas that are yet to be defined.
  • Increasing trade with Venezuela.
  • The introduction of incentives to support Trinidad and Tobago’s maritime industry.

In his Mid-Year review the Minister did not mention any of these initiatives save for intended cooperation with Venezuela in respect of the Dragon Gas Field.

Progress of the National Tripartite Advisory Committee

In the 2017 Budget presentation the Minister stated that the National Tripartite Advisory Council was developing a reform agenda that will cover the following areas:

  • Reform of the Industrial Relations Act and the Retrenchment and Severance Benefits Act.
  • Strengthening the co-operative and credit union sectors to allow them to provide improved services to their members.
  • The introduction of a Fair Share Programme (FSP) that would target micro and small businesses and allow them to access government contracts up to a value of $1m. At the time the 2017 National Budget was presented 1,300 businesses had already signed up for the FSP.
  • Looking at ways to change the culture of labour, considered by government to be plagued by a prevalence of low productivity and a culture of dependency and entitlement.

The Minister gave no update on the work of the National Tripartite Advisory Committee.

Tourism, Sandals and Tobago

The 2017 National Budget placed a heavy emphasis on the promotion of tourism and attracting high-end holiday brands to Tobago. The Minister stated that the government intended to:

  • Complete the redevelopment of the airport facilities at Crown Point/ANR Robinson airport.
  • Improve the air bridge between Trinidad and Tobago.
  • Enhance the Tobago tourism product and increase the room stock including the construction of a possible Sandals Resort.

None of these initiatives were mentioned in the Mid-Year review.

Local Government

During the 2017 National Budget Presentation, the Minister noted that the government had, after an extensive period of consultation, received a report on local government reform. The Minister stated that legislation would be laid before Parliament in Financial Year 2017, detailing reforms which would include the devolution of certain unnamed and undefined powers into the hands of cities, boroughs, and regional corporations.

Save for a comment that the government was looking at allocating at least part of the revenue received from the new Property Tax to local government, the Minister gave no updates on the process of local government reform.


Closing thoughts – a time to chill and a time to invest?

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