By Dr Marlene Attzs, Economist
Ahead of the budget presentation by the Minister of Finance, Colm Imbert, on Monday, September 26, there was the usual speculation on what would be contained in the Minister’s bag of goodies (or tricks) for fiscal 2023.
Some anticipated that the country was in for bad news.
The major issues facing Trinidad and Tobago are clear – rising food prices, rising gas prices, crime, unemployment, and the issue that underpins everything, economic growth.
Additionally, there also are sectoral issues – the age-old question of implementing strategies to place Agriculture on a higher rung on the national ladder so we can finally confront and fix food and nutrition security, how to close the education deficit some families are living with as one impact of Covid-19 and, of course, how to continue living a decent life and providing support to vulnerable citizens.
All the above constitutes a long shopping list that the average citizen expected to be talking points during the presentation of Budget 2023.
Minister Imbert gave the usual narrative – the volatility of the energy sector (prices of oil, gas, and petrochemicals) which naturally poses a challenge for the Government to anticipate its revenue streams.
He also spoke of the breathing space that T&T has enjoyed as a result of Russian President Vladimir Putin’s decision to invade Ukraine. I say this in jest, but we need to understand what has happened – when the Minister of Finance spoke positively of the economic growth the country has enjoyed over the past six months it was only nominal (not real) economic growth – the country has more money than expected simply because the price of oil and gas increased on account of Putin’s invasion of Ukraine and we are a country whose primary exports are oil and gas.
The challenge with building national hopes and dreams on nominal economic growth is that in the blink of an eye the country’s revenues could be reduced, and significantly so, as happened in 2015 – 2019 and more recently in 2020 when the price of oil was negative.
My focus is on some of the measures from Budget 2023 that would directly impact individuals. An increase in the personal income tax allowance limit from $84,000 to $90,000 per year which translates to persons earning a monthly income of $7,500 or less will pay no income tax –an additional $500 in the pockets at the end of the month (given the previous threshold was $7000 and below).
Don’t exhale yet.
That potential $500 “benefit” would quickly be eroded by several measures mentioned in Budget 2023.
First, yet another increase in fuel–Government had choreographed this move some months ago when they signalled they would limit the amount of money allocated to the fuel subsidy. The limit has been reduced from $2.1 billion to just about $1 billion so the difference is now covered by car owners when they pull up at the pump.
Second, there is the property tax to be applied on residential homes by next year and the potential impact of looming property taxes on rents. The increased cost of public transportation (given the fuel increase), galloping (not creeping) food price increases and, lest we forget, mention yet again, of the review of T&TEC and WASA rates which, if implemented, surely will be another layer of pain for the average citizen (while some people still waiting fuh water!)
Talk about give and take!
The price of travel to Tobago has now increased whether you travel by boat or plane. Naturally, this increase in travel cost between the two islands will also increase the cost of doing business in Tobago given that many of the goods that are inputs into Tobago operations are ferried or flown in from Trinidad.
In summary, the multiplier impact of the increased cost of transportation will not be insignificant and will have wide-reaching implications.
With respect to the Education sector there has been some partial relief on the GATE front – students who are either trying to get into UWI to read a Bachelor’s degree but are doing qualifying programmes such as associate degrees or diplomas, will now enjoy GATE funding as they navigate their way to actually start their degree programmes.
Additionally, students pursuing Technical and Vocational Education Training (TVET) programmes who have already accessed GATE for lower level TVET qualifications will now qualify for GATE in support of an advanced diploma or Bachelor’s degree.
The bottom line is that students who fall into any of the above categories will now have multiple bites of the GATE cherry. Not a bad initiative since some persons may not immediately be in a position, financially or otherwise, to upgrade their studies.
My questions though are about efficiency of executing this initiative and its implementation. There also is the issue of outstanding monies owed by Government to tertiary institutions, accounts receivables, for those students who currently benefit from GATE.
For the younger students whose learning was interrupted on account of the pandemic, a remedial education programme has been set up to allow them to “recover and catch up with their learning”.
Two and a half years later I wonder, how will this work? Will there be interest and uptake by the parents of such affected students? Does the Ministry of Education have a register of who might be these students so that there can be targeted interventions to achieve the desired corrective results?
A myriad of other incentives was mentioned to support the private sector including those involved in the energy sector.
What was missing from Budget 2023 was a conversation around a strategy for sustainable economic growth, the real kind, the all-inclusive kind, that leads to economic recovery of both the country and the people.
Alas, it seems our economic strategy is predicated on Putin’s continued show of force in Ukraine that will keep oil prices high and revenue streams flowing into the country’s coffers. Cake anyone?
That’s just my point of view!