Finance Minister Larry Howai - Photo by Micheal Bruce
Breaking News - PREMIUM GAS GOES UP
FINANCE Minister Larry Howai today presented the biggest National Budget in the country's history, and detailed how Government intends to spend more than $58.4 billion in fiscal year 2012/2013.
In presenting the “People’s Budget” in the House of Representatives at the Port of Spain International Waterfront Centre, Howai projected a deficit of $7.69 billion.
The People’s Partnership coalition's third fiscal package saw Government reducing the fuel subsidy.
As a result, the price of premium unleaded gasoline has been increased from $4 a litre to $5.75 a litre.
The price of super unleaded gasoline and diesel remains unchanged.
The Budget has been pegged at an oil price of US $75 per barrel of oil and US $2.75 per thousand cubic feet of gas.
The following is the fiscal measures announced by Finance Minister Larry Howai.
1. In respect of Growth, Trade and Investment:
Incentives for building the financial institutions service industry -
I propose to support the building of the financial institution service industry by introducing legislation with associated tax incentives early in FY13.
Incentives for the CLICO Investment Fund
I propose that Government:
- would waive any applicable stamp duty on the transfer of the 51,858,299 shares of Republic Bank Limited (RBL) from Colonial Life Insurance Company Limited (CLICO) to the Government of the Republic of Trinidad and Tobago (GORTT) as well as on the transfer by GORTT of the 51,858,299 RBL shares to CLICO Investment Fund (CIF);
- would waive any applicable stamp duty on the transfer of units in CIF by GORTT to bond holders after the expiration of the initial offer period.
- would amend the Income Tax Act, Chap. 75:01 and the Corporation Tax Act Chapter 75:02 to expressly exempt from tax the dividends or other distributions paid to resident individuals and companies by the CLICO Investment Fund as well as the profits accruing to the Trust under the CLICO Investment Fund.
* Incentives for enhancing the Creative Industries
- Effective January 1st 2013, I propose to implement for persons in the creative industry, the following tax incentives currently available to sponsors and producers:
- 150.0 per cent tax deduction up to a maximum of $3.0 million for the corporate sponsorship of nationals in the local fashion industry;
- 150.0 per cent tax deduction up to a maximum of $3.0 million for the corporate sponsorship of audio, visual or video productions for the purpose of local education or local entertainment; and
- 150.0 per cent tax deduction up to a maximum of $3.0 million may be claimed by local production companies in respect of their own productions.
- During the fiscal year 2013, the Minister of Trade, Industry and Investment will collaborate with the Chamber of Commerce to establish the necessary Guarantee with the Comptroller of Customs and Excise in order to facilitate relief from customs duty under the carnet system, for persons in the creative industries.
- During the fiscal year 2013, I propose to implement for persons in the creative industries, in particular the film
industry, a regime to allow them to import into Trinidad and Tobago equipment and film-specific goods duty free.
- During the fiscal year 2013, I propose to implement for persons in the creative industries, the zero-rating of Value Added Tax on machinery and equipment The Ministry of Trade, Industry and Investment will collaborate with persons in the creative industry to determine the goods that should be zero-rated.
* Improving the Business Climate
I propose the following:
- to amend the relevant sections of the Exchequer and Audit Act in order for the Comptroller of Customs, as a Receiver of Revenue, to accept forms of payment other than cash and certified manager¡¦s cheques;
- to have proclaimed the Electronic Transactions Act 2011 in order to give legal effect to the use of electronic signatures and electronic transactions in Trinidad and Tobago, including electronic signatures to be used in the submissions of goods declarations to the Comptroller of Customs and Excise; and
- to amend through the Customs (Amendment Bill) 2012 the Customs Act, Ch. 78:01 to allow advanced passenger and cargo information to be provided electronically to the Comptroller of Customs and Excise.
2. In respect of Crime and National Security
I propose that:
- the non-taxable special allowance now being paid to the members of the protective service will be extended to include the Special Reserve Police Officers. This would be effected by an amendment to the Special Reserve Police Act Chapter 15:03 and would take effect from October 2 2012; and
- the purchase of CCTV cameras and digital video recording equipment for homeowners, community and
3. In respect of Corporate Social Responsibility
I propose to:
- encourage companies to provide direct financial contributions to sporting activities by increasing the maximum allowable deduction from two million dollars to three million dollars commencing from the year of income 2013.
4. Gaming Industry
Effective October 1 2012, the taxes paid on gaming tables and other devices by private members clubs would be increased as follows:
1. for every Baccarat Table/ Device $50,000.00 per annum
2. for every Black Jack Table/ Device $60,000.00 per annum
3. for every Caribbean Stud Poker Table/Device $75,000.00 per annum
4. for every Dice Table/Device $35,000.00 per annum
5. for every regular Poker Table/ Device $30,000.00 per annum
6. for every Pool Table/ Device $2,000.000 per annum
7. for every Roulette Table/Device $60,000.00 per annum
8. for every Rum 32 Table/ Device $75.000.00 per annum
9. for every Sip San Table/ Device $75,000.00 per annum
10. for every Slot Machine/Online Gaming Device
$12,000.00 per annum
11. for every other table or device not mentioned above $30,000.00 per annum
5. In respect of the National Insurance System
I propose that:
- in respect of Maternity Benefits, the Maternity Protection Act (MPA) Chapter 45:57 was amended to increase the period for maternity leave from thirteen weeks to a period of fourteen weeks on May 22, 2012. It is proposed that the relevant Regulations of the NIS Act Chapter 32:01 be amended to provide the NIBTT with the statutory authority to pay the fourteen-week maternity allowance with effect from May 22, 2012.
- In respect of Other Benefits payments all NIS benefits will be increased by an overall 50.0 per cent with the exception of the minimum retirement pension, which was already increased effective February 2012. The following grants: maternity, special maternity, retirement grant and funeral grants, will all be increased by 50.0 per cent in 2013. The other benefits, such as sickness, maternity allowance, invalidity, survivor¡¦s and employment injury, will be increased by 25 per cent in 2013 and 20 per cent in 2014. The two-phased increase to these other Benefits also results in a cumulative increase of 50 percent.
- In respect of Minimum Survivor¡¦s Benefits: survivor¡¦s benefits in respect of spouses, children, dependent parents and orphan children of a deceased contributor or a NIS pensioner will be increased by amending the National Insurance Act Chapter 32:01. The increased benefits would be as follows:
- spouse :$600;
-dependant parents :$600,if only one parent is alive, or :$300 each if both are alive; and
- orphan : $1,200.
- In respect of Retirement Pension: the old earnings class system will be converted into a career average-indexed earning system.
- In respect of the modification of the present contribution System: It is proposed to change the contribution rate of 11.4 per cent to 11.7 per cent in 2013 and 12.0 per cent in 2014 resulting in a very small increase of 0.1 per cent for employees and 0.2 per cent for employers in 2013 and similar increases in 2014.
- In respect of the Maximum Insurable Earnings: they will be increased from $8,300 in 2012 to:
Year Maximum Insurable Earnings
It is proposed that the annual increases in the maximum insurable earnings and the new pension benefit formula take effect in 2013 through amendments to the National Insurance Act Chapter 32:01 and the annual increases would take effect in the respective years.
- In respect of the Inclusion of the Self Employed in the NIS System: the National Insurance Act will be amended to allow for the inclusion of self-employed persons in the National Insurance System with access to retirement benefits from as early as age 60 subject to the relevant provisions.
- In respect of Voluntary Retirement Pension: all working persons as well as those who are self-employed will be afforded the opportunity to provide additional retirement income to supplement their NIS benefits. This plan will be separate from the National Insurance System and will provide an investment instrument at competitive rates.
In respect of Greater coverage for employment injury: employers will be provided with a full range of employment injury benefits in order to reduce their burden in complying with both the Workmen's Compensation Act and the National Insurance Act.
- In respect of the Disability Assistance Grants
I propose to increase the disability assistance grant by $200 per month to $1,500 per month. With respect to a child with medically certified disabilities this will rise from $800 to $1,000 per month. This measure will take effect from February 1, 2013.
6. (a) In respect of Housing Development
I propose to stimulate the construction sector and alleviate the needs for housing stock by exempting from income tax the gains or profits derived from the initial sale of newly constructed houses of the class specified in section 43 by any person registered in the prescribed manner as a trader in such houses. The exemptions provided under section 42(2)(c) will apply in respect of a house the cost of construction of which, exclusive of the cost or value of the land, in the opinion of the Minister, having regard to normal building costs prevailing at the time of its construction, would not exceed at the maximum upper limit of one million five hundred thousand dollars, where construction commenced after October 1 2012. The exemptions provided under section 42(2)(c) will be operative for a period of three years beginning with the date of the passage of the required legislation.
(b) In respect of Land Development
I propose to exempt income from the gains on profits derived from the initial sale of land developed for residential housing where the development of such lands commences after October 1 2012 and the sale is consummated prior to December 31, 2015
7. In respect of Import Duty on All Tyres
I propose to provide consistency of treatment in the duty regime for new and used tyres with an application of a 30.0 per cent import duty, bearing in mind that new tyres attract an import duty of 30.0 per cent and used tyres are imported duty free. In keeping with the rules under the CARICOM Treaty, the Ministry of Trade and Industry will submit this proposal to COTED for approval prior to its implementation.
8. In respect of the Energy Sector
I propose to:
(1) harmonize the SPT rates issued Pre-1988 and Post 1988 for marine areas by removing the distinction between the Pre-1988 and Post-1988 SPT rate for marine areas.
One SPT rate will be allowed for marine areas as currently pertains for land and deep-water. The SPT rate for marine areas will be set at the Post-1988 rate of 33.0 per cent for prices ranging from US$50/bbl¡VUS$90/bbl. The formula used in determining SPT rates above US$90/bbl will continue as will the SPT provisions for land and the deepwater;
(2) introduce a special SPT rate for new field development to enhance the economics of field development of small pools and increase the competitiveness of this country¡¦s fiscal regime. A special SPT rate of 25% is proposed for approved new field developments, at prices above US$50 and up to US$90/bbl. Thereafter for prices above US$90/bbl and up to US$200/bbl, the SPT formula as currently exists will be applicable. This new SPT rate is intended to spur development of inactive fields, not yet in production; and
(3) introduce an uplift of 40.0 per cent, for a period of five years, on exploration cost (excluding exploration dry holes) incurred in undertaking approved projects in deeper horizons.
9. In respect of the Reduction of the Fuel Subsidy
I propose to reduce the subsidy on premium gasoline. The price for premium gasoline will be close to the market price and would be fixed at $5.75 per litre. The new pricing structure will take effect from October 2 2012.
10. In respect of Drivers Permits
I propose that with effect from November 1st 2012 upon the first issue, the driver¡¦s permit will remain valid for five years, and thereafter upon renewal the validity would be for a duration of either five years or ten years at the option of the holder of the driver¡¦s permit. The fee for the first issue of the driver¡¦s permit will remain at $500.00 and the fee for the five year and ten year renewal periods would be respectively $500.00 and $1,000.00.
11. In respect of the Licensing Department
With effect from October 2nd 2012, I propose to streamline the fee provisions under the Motor Vehicles and Road Traffic Act and to improve the administration of the Licensing Department. Motor cycles, school buses and omnibuses will be brought within the tax net.
12. In respect of the Business Levy Threshold
In light of the increased VAT threshold, it is also proposed that the threshold for the Business Levy should also increase from $200,000 to $360,000. This measure will take effect from January 1st 2013.
13. In respect of the Transfer of CEPEP and URP Employees to the Private Sector
I propose to provide each company which elects to employ CEPEP and URP employees with an employment allowance uplift of salary of 150.0 per cent for tax deduction purposes.
14. In respect of the Construction of Commercial Buildings
I propose to provide an exemption from Corporation Tax for a period of five years in respect of the profits earned in the construction and rental of commercial buildings to be constructed within the next five years, such buildings to include multi-storeyed car parks.
BUDGET: ESTIMATES OF REVENUE AND EXPENDITURE
Mr Speaker, I wish now to turn to our estimates of revenue and expenditure for Fiscal Year 2013. We are now at a turning point in our growth dynamics. We shall consolidate our gains and ensure that our reforms lead to improved efficiency in our national economy. With a world economy consistently in change and at times in turmoil we have put in place mechanisms to cope with the inherent risks in the global economy. We have budgeted in a prudent manner.
Mr Speaker, Government expenditure is planned on the basis of revenue projections, which are predicated on oil and gas assumptions of US$75 per barrel for the Trinidad and Tobago basket of crude and US$2.75 per MCF, respectively. It should be noted that an average oil price of US$80 per barrel for Trinidad and Tobago basket of crudes equates to a West Texas Intermediate (WTI) oil price of US$75 per barrel.
Mr Speaker, we are projecting the following:
- Total Revenue - $50.736 billion;
- Oil Revenue - $20.038 billion;
- Non-Oil Revenue - $30.698 billion; and
- Total Expenditure net of Capital Repayments
and Sinking Fund Contribution - $58.405 billion.
Mr Speaker, I am therefore budgeting for a fiscal deficit of $7.669 billion or 4.6 per cent of Gross Domestic Product. I propose to reduce this deficit by the equivalent of a minimum of 1.0 per cent of GDP per annum over succeeding years.
Mr Speaker, I have ensured that the expenditure profile would maintain a delivery of services to ensure the comfort, well-being and security of our citizens. The allocations to the various Ministries would achieve this objective.
- Education and Training : $9,149.1 million;
- Health : $5,108.7 million;
- National Security : $5,503.7 million;
- Public Utilities : $3,783.1 million;
- Housing : $3,503.7 million;
- Works and Infrastructure : $2,412.9 million;
- Transport : $1,682.8 million;
- And Agriculture : $1,338.3 million
Mr Speaker, no appropriation has been made in this Budget for the Constituency Development Fund. It is expected that the appropriate provisions will be made when the legislation and associated controls are put in place by this Honourable House.
Mr Speaker, after three years of negative and negligible growth and against a worrisome global environment, we have stabilized the economy with a resumption of a 1.2 per cent growth rate in 2012. We have been able to cope with the stresses and strains ever present in the interconnected world economy. We have put the economy on a self-sustaining growth path over the medium-term. We project an annual average growth rate of 2.5 per cent. We have exited the crisis much more quickly than many other similarly-circumstanced countries and with substantial economic and financial buffers. We shall pursue a proactive reform and policy agenda for transforming and creating a new Trinidad and Tobago.
The well-being of our citizens is paramount to this Administration. We have had four (4) years of fiscal deficits; but in the main they were aimed at buttressing economic activity for securing growth and job creation. We have succeeded. We are now at full employment levels and our policies and programmes are aimed at ensuring that our workforce can meet the demands of a growing and increasingly modernized economy. We are now in a position to return the fiscal framework to a sustainable path and in the process to resume savings for future generations.
We have established a roadmap to bring our budget into balance by 2016, if not before. We would balance the need for creating the confidence and trust of our citizens in our fiscal position with the need for supporting growth and development and for generating quality jobs and prosperity. Our state enterprise sector will have to do more with less resources. They must do so through a greater focus on higher performance standards and higher worker productivity.
The maintenance of stimulus would underpin our growth dynamics which are being anchored on an increasing private sector involvement in the economy and improving competitiveness. Central to this process is our commitment to consultation with all our stakeholders. Growth will be further supported by high educational standards, by an increased credit flow from our financial institutions and generally, by a commitment of our national community to hard work, discipline and increased productivity.