By Prior Beharry
DELIVERING a four-hour Budget statement, Finance Minister outlines a new minimum wage of $20.50 in a fiscal package with a total expenditure of $59.209 billion.
He said total revenue was expected at $54.012 with a fiscal deficit of $5.197 billion.
In addition to the minimum wage, a school supply grant of $1,000 based on a means test, 1,000 more police officers and backpay of $1 billion to public servants by Christmas were some of the measures, the minister announced.
He said property tax will also be introduced in the new fiscal year.
Imbert said the oil price assumption for 2024 will be US$85 per barrel (compared with US$92.50 per barrel in 2023) and a natural gas price assumption at US $5 per Metric Million British Thermal Unit (MMBtu), compared with US$6 per MMBtu in 2023.
He said the revenue was expected as follows:
- Oil revenue $16.709 billion;
- Non-oil revenue $35.547 billion; and
- Capital revenue $1.756 billion
Imbert said the fiscal deficit for 2024, estimated at $5.197 billion, is 2.7% of GDP, again within the international benchmark of 3%.
The major allocations for ministries include:
- Education and Training $ 8.022 billion;
- Health $ 7.409 billion
- National Security $ 6.912 billion
- Works and Transport $ 3.394 billion
- Public Utilities $ 3.018 billion
- Rural Development and Local Government $ 1.825 billion
- Agriculture $ 1.442 billion; and
- Housing $1.165 billion
Minimum wage
Regarding the minimum wage, he said, “Madam Speaker, I propose to initiate action to minimise the country’s socio-economic imbalance and stimulate consumer spending aimed at economic expansion.
“To achieve this objective, I propose to increase the minimum wage by 17 %, or $3 per hour, from $17.50 to $20.50 per hour.
“This measure will benefit approximately 190,000 persons in the workforce and will require an amendment to the Minimum Wages Act, Chapter 88:04 via a minimum wage order.
“This measure will take effect from January 1, 2024.”
Tourism Accommodation Upgrade Project: Small Hotels
Imbert said, “Madam Speaker, we are extending by three years the Tourism Accommodation Upgrade Project (TAUP) incentive, which is due to expire on September 30 2023. This facility provides a reimbursable grant to eligible tourism accommodation facilities.
“Madam Speaker, this measure will be reinstated from November 1 2023 for another three years.”
Export Sales of Manufacturing Companies: Business Levy Charge
He said sales facilitate international trade and stimulate domestic economic activity by creating employment, production, and revenues.
Imbert said, “In this highly globalised and competitive environment within which businesses operate, I propose to exempt from business levy manufacturing companies whose gross receipts fall within the 30% tax bracket from business levy charges regarding only export sales. This measure aims to create a competitive advantage for local manufacturing businesses to engage in local sales.
“Madam Speaker, this initiative will take effect from January 1, 2024, at an estimated tax loss of $20 million annually. This measure will require an amendment to the Corporation Tax Act, Chap. 75:02.”
Energy Sector: Supplemental Petroleum Tax
The minister has also proposed to increase the Sustainability Incentive from 20 % to 25% with respect to the rate of supplemental petroleum tax for any mature marine or small marine oil fields.
He said this will encourage smaller oil producers and lease operators in small and mature marine oil fields to incentivise further their production.
Imbert said, “In the Finance Act 2023, I also propose to introduce adjustments to the SPT regime for the shallow water areas, similar to what we have implemented for small onshore producers, introducing a new threshold of $75 per barrel for SPT for small shallow water producers.
“Where feasible, we will also make suitable adjustments to the capital expenditure allowances for small shallow water producers.
“Madam Speaker, these measures will take effect on January 1, 2024, and will require amendments to the Petroleum Taxes Act, Chap. 75:04.”
Investment Tax Allowance: Cybersecurity
Imbert said with the rapid advancement of technology and the growth of the digital economy, the increasing threat of cyber-attacks means that more secured and concerted effort is required to protect sensitive information being penetrated.
He said, “To aid in reducing this risk, I propose to introduce a Cybersecurity Investment Tax Allowance of up to $500,000 for companies which incur expenditure in respect of investments in cybersecurity software and network security monitoring equipment.
“To qualify for this allowance, the expenditure must be certified by iGovTT.”
“Madam Speaker, this measure is envisioned to incentivise companies to invest in cybersecurity for 2 years from January 1 2024 to December 31 2025. This measure will require amendments to the Corporation Tax Act, Chap. 75:02 and will result in an estimated tax loss of $8 million.”
Exempt Income: Expenditure Earned
Imbert said there has been legislative ambiguity with respect to the treatment of expenditures claimed against exempt income. From a tax administration perspective, since the income is already exempt from taxation, any expenditure incurred towards earning such income should not be allowed as a deduction since it reduces the tax on the non-exempt income.
He said, “Madam Speaker, I propose to amend the tax legislation to address this issue by disallowing expenditures incurred in earning exempt income, subject to specific provisions of the tax law stating otherwise.
“This initiative will protect the tax base in Trinidad and Tobago, harmonize the law, and bring us into alignment with standard practice in jurisdictions worldwide.
“Madam Speaker, this measure is anticipated to yield approximately $75 million in tax savings and will take effect on January 1, 2024.”
Public and Private Schools: Corporate Sponsorship
The finance minister said education plays a vital role in enhancing the progress and growth of society and is a powerful tool to make the world a better place.
He said, “In this context, I propose to introduce a 150% tax allowance of up to $500,000 on corporate sponsorship to public and private schools registered with the Ministry of Education.
“It is envisioned that this measure will encourage the enhancement of these schools to ensure that access to and delivery of education are promoted. This measure will take effect on January 1, 2024, and will require amendments to the tax legislation.”
