Property tax appears increasingly to be a fait accompli for this October 5 national budget.
Asked about the implementation of property tax yesterday, Minister of Finance Colm Imbert said: “We had committed in our manifesto to continue with the Revenue Authority and the property tax system. That is there in black and white. We didn’t hide from anybody with that. We put it there—that we were doing the valuation of properties and preparing the valuation rolls in order to allow the implementation of that particular tax. And also we were continuing our work on the Revenue Authority. So it is not a secret.”
Asked if given the slump in the economy due to Covid-19 which would affect property owners meant that there may be challenges with the payment of property tax, Imbert said: “It is a sort of Catch 22. It is a very complex situation.”
He said on one hand the “commentators” say that Government should balance the budget.
“Let’s say our revenue is $35 billion, instead of $47 or $48 billion that we had planned. If we balance the budget as some of the commentators tell us to do, we will have to cut $15 billion out of our expenditure profile. Already we are running a tight ship, we are not in a situation where we are overspending. A lot of this is mandatory expenditure. Every month the mandatory expenditure in the Ministry of Finance, and I am talking about salaries, senior citizens pension, Government pensions, social welfare payments, public assistance etc, debt servicing and all other mandatory payments, (this is before you get to discretionary payments such as goods and services and the capital programme)...The mandatory payments amount to $3.5 billion. So we start off with a mandatory minimum of $42 billion a year. So if we were to cut expenditure to $35 billion, you would have to reduce some of those things,” Imbert stated. “So you cannot do what people are asking you to do, because if you stop tax, for example, you already have a $15 billion hole. (If) you don’t collect tax, what does that do? Make it a $20 billion hole. Where is the $20 billion going to come from?”
He was speaking at the post-Cabinet news conference at the Diplomatic Centre, St Ann’s yesterday.
Imbert noted: “You have two groups of commentators, one (group) says ‘cut expenditure to $35 billion’, which means retrenching 20,000 people, stopping old age pension, you (would) just (have to) cut out everything and the country descends into chaos.
“Then another group (of commentators) are saying ‘don’t borrow...don’t withdraw from the Heritage Stabilisation Fund to meet your expenditure’. So how on earth is one supposed to deal with these two competing things?
“So we have to be very, very careful about any reduction in tax collection. Because what that does is prevent us from doing the very things that the businesses need to survive, to keep the cost of goods and services at a reasonable rate and all that sort of thing. So it is easy to say but not easy to do,” Imbert said.
Asked about the deficit situation for this year, Imbert said he had previously gone to Parliament to give an idea of what Covid-19 was doing to the balance of payments and the relief measures.
He said he had indicated then that the estimate was in the vicinity of $15 billion.
He said until the public servants do their final crunching of numbers which he expected to get within the next week, this is the kind of figure being looked at.
He said there had been a significant reduction in tax revenue from March—all forms of taxes (VAT, income tax, corporation tax, royalties etc).
On persistent complaints from people with respect to the Salary Relief Grant, Imbert said: “Of course there would be human error. There would be applications which may have fallen through the cracks and are not being dealt with appropriately.”
Imbert however stated that it was also found that people had been “double dipping”.
“It is not unexpected. Remember that people are desperate. You have to have a human side in all these things.”
He said if a person gets money ($4,500) from the Ministry of Finance and then manages to get through with another $4,500 from the Ministry of Social Development by not making a proper declaration (that they received income from another ministry) on the form, this was an offence.
He said the Central Audit Unit of the ministry was looking into this matter and consideration was being given as to what action should be taken, “including prosecution. But you have to understand that people are a bit desperate here.”
Long Circular and Trincity Malls
In response to a question, Imbert said no decision had been made to sell Long Circular and Trincity Malls. He said the liquidator was in the process of getting valuations of the assets because in order to dispose of the CL Financial and CLICO assets, the liquidator was required by the court to obtain valuations. He said after this, the board of the companies would determine whether this was the right time to sell.
He said the value of a shopping mall in 2020 in the middle of the pandemic was far less than it was in 2019 since the retail outlets in shopping malls have been profoundly affected by Covid-19.
He said he had also asked that a 2019 valuation of the malls be obtained as well.
Imbert said the final bailout for CL Financial and CLICO in terms of indebtedness to the State was $30 billion.
He said one of the ways of paying back the debt was in the form of a set-off, where the State gets value through the acquisition of an asset, such as was done with the Golden Grove estate in Tobago.
He said Government was acquiring “strategic assets and netting off the value of these assets against the debt owed”.
He said CL Marin, which was a little over $100 million, was one such example.
Avalanche of budget
On his initiative for consultations with stakeholders on the 2020/2021 budget and the fact that one union, National Trade Union Centre of T&T (Natuc), rejected the offer, Imbert said: “That was not a union. That is a group and the head of it is politically opposed to the PNM, who contested the elections against the PNM...So when you hear things coming from Natuc, you have to take it with a grain of salt. Look at the composition of the leader of Natuc. Come on! You have active politicians contesting general elections against the PNM. Yuh really expect them after they get so much licks in the election to come out and be so favourably disposed towards us?”
Imbert said he was very happy to say that he had received proposals from JTUM and trade union groups. He said there was an “avalanche of proposals coming in”.
He said he asked his staff to surmise the proposal in bullet points and it had reached 45 pages already. He said interesting recommendations were coming in from every sector of the society and the feedback was tremendous.
Imbert said he wanted to remind the country of the “Spotlight on the Budget and the Economy” forum scheduled for Monday, September 28, at which the Ministry of Finance would give details of the country’s finances and what occurred in 2020 in terms of the effect of Covid on Government’s revenues and expenditure.
He said there would also be a panel discussion involving people from the private sector, the State enterprise sector and the Ministry of Finance. The Prime Minister will also be speaking at this function.
Imbert said there would be a virtual audience of at least 300 people.
He said due to Covid restrictions, there will be an audience of 80 people in the ballroom, which can hold normally up to 500.
There will be a system for people to send in questions and get a response from the panel.
The event will take place from 8.30 a.m. to about 1.30 p.m.