AGREEMENT has been reached between Minister of Finance Colm Imbert and the T&T Chamber of Industry and Commerce that will allow local businesses to get cash for the billions of dollars in Value-Added Tax refunds owed to them by the end of next month.
Last weekend, Chamber CEO Gabriel Faria said he had spoken to Imbert, who said he had “targetted the end of the second quarter of the 2020 fiscal year (March) for the bonds.” Express Business e-mailed the permanent secretary in the Ministry of Finance, Vishnu Dhanpaul, on Monday afternoon seeking verification of the minister’s commitment, but there was no response up to Monday evening.
The business community has been clamouring for the payment of VAT refunds, now estimated at over $5 billion, for several years and during his last budget presentation in October, Imbert promised that in 2020 he would pay VAT bonds worth $3 billion.
Faria said there are some businesses that have expressed interest in accessing the bonds as soon as it becomes available.
“We expressed the concerns raised by some members of the business community on the yield of the bond (1.5 per cent) which will mean that companies that have cash flow constraints and need the cash urgently, will have to cash in the bond and get less than the face value due to the low yield. This will mean them having to write off part of the amount owed by the Government and the interest which is due according to the law,” Faria said.
The Chamber’s chief executive said: “There are some businesses who have expressed interest in the bond if it had a higher yield and while some businesses were seeking alternative remedies, we expect each business will make their decisions based on their own circumstances.
“In our letters previously written to the minister, we asked him to consider making changes which will reduce the burden on the SMEs (small and medium-sized enterprises) who are consistently due refunds either because of the products they produce or their high level of exports. Changes to the bond will serve as an incentive to drive further growth from this sector.”
The Chamber CEO further stated that they offered to facilitate a meeting with the Minister and some of the companies impacted in order that dialogue could take place with the aim of reaching a possible solution.
“We fully recognise the constraints the Government is operating under, however we hope they will do what’s required to support those organisations which are obeying the law and are tax compliant,” he said.
Speaking to the Express Business, Faria broke down the figures as to how much is owed to some business owners:
• One software company is owed $2,500,000 of Vat refunds over three years;
• One manufacturing company that produces pipes is owed $3 million;
• A distributor that exports products to the region is owed $2 million;
• A construction company that just did a large project in Port of Spain is owed $38 million;
• A company that sells toilet paper is owed $30 million.
“Once the monies are paid to the private sector, it can help the wheels of the economy get moving again. That’s because that money is going into the private sector and can pay the bills they owe and they can now invest,” he added.
Additionaly, he noted that the Government is still focused on generating revenue from the economy as opposed to creating an environment where the private sector can produce income.
Impact of crime on business
Faria said due to the increased criminal activities, business owners now have to spend more on security systems and to hire more security guards to protect their workers, customers and property.
“I have heard businesses say crime has increased their operating cost by as low as 10 per cent and as high as 100 per cent. I also know of companies that are hiring transportation for their employees who are working shift, to be dropped off and picked up,” he noted.
Faria added that many places no longer open late at night, due to the robberies and assaults that have taken place.
He said the Chamber, along with other stakeholders, met with National Security Minister Stuart Young on the issue of crime earlier in the year and suggestions were given as to how to mobilise the entire T&T Defence Force along with the Police Service.
However, he said Minister Young has not yet got back to them as to what is the Government’s plan of action to deal with this serious situation.
“I know it is not something that can be done quickly but there must be short-term actions that can be taken. While we understand the crime problem was not born overnight something must be done,” Faria said.
Faria commended Police Commissioner Gary Griffith for trying with the resources he has but believes more manpower and apparatus need to be given to the police service in order to win the battle against crime.
He also believes that the Ministry of Social Development and the Ministry of Education should be dealing with the causes of crime along with the other private sector organisations that are already engaged in initiatives to help troubled communities.