Maroc - NEWSDAY.CO.TT - A la Une - 22/Oct 14:21

Reflections on the national budget

NIGEL GITTENS With the budget debate in Parliament now concluded, it seems timely to assess both the strengths and weaknesses of the fiscal measures announced, and to evaluate whether this financial plan can realistically move the nation toward greater economic stability and growth. Although initial reactions across society would have described this budget as fair to the ordinary citizen, many are now realizing it largely mirrors budgets of previous years. Once again, revenue expectations depend on overly optimistic assumptions about oil and gas prices – our primary sources of income. There is also the recurring complaint that while some concessions were offered, they are effectively offset by increased taxes on essential goods and services. Outlined below are several of my key areas of concern: • Rising tax burdens – consumers will inevitably face higher costs from new or expanded taxes, including those on landlords, customs and excise duties, general sales, alcohol, and liquefied propane gas. • Lack of a clear diversification strategy for the onshore economy, leaving the country still overly dependent on energy. • Tax collection effectiveness – it remains uncertain whether the Inland Revenue Division can achieve its revenue goals given its internal restructuring challenges and the local culture of tax evasion and avoidance. • National Insurance Scheme reforms – it is doubtful that the proposed adjustments will succeed in stabilizing the system amid an ageing population and declining workforce participation. • Absence of strategic direction – the budget offers little insight into plans for critical sectors such as planning, housing, education, agriculture, trade and industry, energy, local government, health, social development, tourism, national security, sports, and culture. To claim that confidence in this budget is low would be an understatement. The new administration has missed a valuable opportunity to redefine the nation’s economic trajectory. Rather than introducing bold, structural reform, the approach remains one of minor adjustments and short-term fixes – essentially the same pattern characterised by past governments. Ultimately, the financial burden will fall once again on the consumer, while escalating public debt will leave future generations to shoulder repayment obligations. Readers familiar with my previous writings would know that I am a long-time advocate of site value taxation. Implementing such a system would bring numerous benefits. It would distribute the tax burden more fairly, promote transparency and accountability, and eliminate the ability to shift taxes onto consumers. Because land is visible and its value easily assessed, evasion and avoidance would be nearly impossible. The tax would be based on each site’s capacity to yield value, and the annual obligation would be predictable and equitable. Crucially, site value taxation would apply to all types of land – commercial, industrial, residential, and agricultural – creating ripple effects across the economy. It would encourage new business formation, expand employment, increase real wages, and boost purchasing power. Moreover, it would promote true diversification and stimulate the production of affordable goods and services, thereby generating broad-based prosperity. Such reform would have positive implications across virtually every sector: housing, education, tourism, agriculture, national security, healthcare, law and order, sports, culture, and the arts. In upcoming analyses, I intend to elaborate on these effects in greater detail, but for now, I invite readers to envision how such a transformation could unfold. At present, TT is in the grip of a deep recession – not merely due to reduced oil and gas output, but because land values have become prohibitively high, making capital inaccessible to ordinary citizens. Meanwhile, labour values remain depressed due to persistent unemployment, creating an unhealthy imbalance among the three essential factors of production: land, labour, and capital. The state continues to bear excessive responsibility for sustaining the economy. Introducing a site value tax – gradually phased in over two or three years – could correct these imbalances. Although progress might be slow at first, by the third or fourth year of implementation, the country would begin to experience genuine transformation. This would be a transformation rooted in fairness and inclusivity, where all citizens and sectors contribute proportionately, businesses flourish under equitable conditions, and employment reaches optimal levels. Such a policy offers the most practical route toward a more stable, productive, and self-sustaining economy – an economy that truly serves the interests of every Trinidad and Tobago citizen. The post Reflections on the national budget appeared first on Trinidad and Tobago Newsday.