Tuesday, January 23, 2018

Will Mr Imbert tax forex transactions?*

Colm Imbert

One of the main unknowns of the 2018 budget, due in less than six weeks, is whether Minister of Finance, Colm Imbert, will follow his Barbadian counterpart in imposing a tax on foreign exchange transactions.

Barbadian Finance Minister Christopher Sinckler introduced a 2 per cent fee on all purchases of foreign exchange including over-the-counter cash, bank drafts and wire transfers in a budget speech at the end of May.

Mr Sinckler introduced the fee to raise revenue and preserve the island's foreign reserves—both of which Mr Imbert also needs to do, given my estimate of the $10 billion plus fiscal deficit T&T's faces for the 2018 fiscal year in last week's edition.

The foreign exchange tax will make US dollars more expensive and there may be a commensurate downward adjustment of the TT/US exchange rate, which has only depreciated by 0.68 per cent between the start of the 2017 fiscal year and August 17, 2017.

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