T&T’s 2019 BUDGET – THE TURNAROUND PT. 5

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A Firstline Securities Limited Blog By: Mike

Introduction

In this our fifth blog entry we complete our look at the 2019 National Budget of the Republic of Trinidad and Tobago – Turnaround.

Revenue and expenditure estimates

Total revenue is budgeted at TT$47.724 billion TT$5.106 billion higher than the estimated outturn for 2018. This amount includes oil and gas revenue of TT$9.518 billion, non-oil revenue of TT$35.197 billion, and capital revenue of TT$3.009 billion.

Revenue estimates are predicated on an oil price of US$65 and a gas price of US$2.75 per MMBtu.

Total expenditure is budgeted at TT$51.776 billion, an increase of TT$2.897 billion over that estimated for the outturn of 2018.

This leaves a budget deficit of TT$4.052 billion representing 2.5% of GDP (2018: 3.9% of GDP). The Government intends to finance this by raising domestic finance of TT$3.826 billion and external financing of TT$0.226 billion.

Main Allocations of Expenditure for 2019

The main allocations of expenditure for 2019 are as follows:

The Fuel Subsidy

With immediate effect the cost of super gasoline was increased from TT$3.97 per litre to TT$4.97 per litre while diesel remains at the current price of TT$3.41 per litre.

LPG (cooking gas) will continue to be subsidised in order to assist the poor and vulnerable.

The Public Service Pension

The Minister announced proposals to pay a public service pension of TT$3,500 per month immediately upon the retirement of the public servant. This measure will take effect from the 1^st January 2019 and will cost TT$63 million.

Rewards for Crime Stoppers

Rewards of up to TT$100,000 will be offered for information on the 25 most wanted criminals as identified by the Trinidad and Tobago Police Service. The Government is targeting these criminals in an effort to deter murder and kidnapping. This measure is expected to cost an additional TT$2.5 million and will take effect from the 1^st January 2019.

Remote Health Centres

The Government proposes to open remote health centres in Grand Riviere, Blanchchisseuse and Cedros on a twenty-four-hour, seven-day a week basis with effect from the 1^st January 2019, in order to assist citizens in those areas who currently have to undertake long journeys to hospital facilities in emergency situations.

The Stamp Duty Threshold

In order to assist first time home buyers, the Minister announced an increase in the threshold for stamp duty for first time buyers from TT$850,000 to TT$1.5 million. This is expected to assist 1,000 first time buyers each year and will come into effect from the 1^st January 2019.

Penalties

The Minister announced a number of increases to penalties for various offences. This included:

• A 100% increase in all fines relating to cruelty to children under the Children’s Act.
• A 100% increase in all penalties under the Litter Act.
• An increase in the fine from TT$1,500 to TT$5,000 under the Agriculture and Fires Act.

All of these changes take effect from the 1^st January 2019.

Compliance with the Board of Inland Revenue

The Minister announced a number of changes designed to improve compliance with rules and regulations relating to the Board of Inland Revenue (BIR). Those changes included:

• An increase in the penalty for submitting a fraudulently incorrect TD1 form from TT$3,000 to TT$10,000.
• An increase in the penalty for offences in respect of fraud from TT$50,000 to TT$250,000.

In addition, the Minister announced the recruitment of an additional 150 staff members to support the public in the filing of their income tax returns. The Government intends to focus on professionals (doctors, attorneys, accountants, and other professionals) to ensure that those groups in particular are paying the correct amount of income tax.

Social Factors

Increases were announced for the amounts payable under the food card system, the disability grant, and the public assistance grant with additional amounts being paid from the 1^st January 2019.

The food programme has been subject to extensive verification with over 18,000 individuals being removed from the scheme. A new database holds the names of 24,330 households who will receive support totalling TT$139.7 million.

Public assistance grants are currently delivered to 22,861 persons at a cost of TT$340.8 million while disability grants are delivered to 23,245 persons at a cost of TT$502 million.

The cap on joint incomes received by retirees in respect of the national insurance and old age pension was increased to TT$6,000 per month. This change will also take effect from the 1^st January 2019.

Senior citizen pensions are being provided to 95,300 citizens at a cost of TT$3.5 billion.

Tax Allowances for Tertiary Education

With effect from the 1^st January 2019 the allowance for tertiary education expenses will increase from TT$60,000 to TT$72,000 per year. This change is designed to compensate taxpayers for the prohibitive cost of overseas education.

Foreign Exchange Earnings Tax Credit

The Minister announced plans to strengthen the framework for boosting non-energy exports and generating foreign exchange. Legislation will be introduced in Parliament during the current fiscal year to provide for an incremental foreign exchange earnings tax credit for the manufacturing sector. Sectors targeted for the tax credit include agro-processing, food and beverage, non-energy and non-petrochemical products, and any other business approved by the Minister for Trade and Industry.

What are your thoughts on the 2019 National Budget?

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