Economy
From The Report: Trinidad & Tobago 2018
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With global energy prices recovering and a new natural gas project now on-line, some predict an end to T&T’s recession in 2018. In May 2018 the Ministry of Finance reported that as energy activity recovers and other sectors begin to grow, tax revenues will likely exceed expectations, and the fiscal deficit was revised down from 3.1% of GDP in 2018 to 2.5%, compared to 8% in 2017. However, while a rebound in the energy sector is welcome, it is other industries that require the majority of government focus if the country is to become sustainably diversified and financially secure for the long haul. This chapter contains interviews with Allyson West, Minister of Finance; Patricia Ghany, President, American Chamber of Commerce of Trinidad and Tobago; and Derek Chin, Chairperson, Movie Towne.
Articles from this Chapter
On all fronts: Economic optimism is returning as the government continues to work to tackle issues ranging from debt to corruption
In with the new: Allyson West, Minister of Finance, on establishing a new revenue authority to improve tax collectionOBGplus
Interview:Allyson West What factors led to Trinidad and Tobago’s decision to establish a new tax authority? ALLYSON WEST: Tax administration has become more complex and demanding. Internationally, T&T must comply with new obligations including the US Fair and Accurate Credit Transactions Act of 2003 as well as the OECD’s Global Forum on Transparency and Exchange of Information for Tax Purposes and its strategy to curb base erosion and profit shifting. The current system has proven…
Adaptive approach: Patricia Ghany, President, American Chamber of Commerce of Trinidad and Tobago, on reforms needed to increase the investment appeal of the countryOBGplus
Interview:Patricia Ghany In what ways have the recent fiscal and tax changes affected the business community? PATRICIA GHANY: We understand that taxes are a source of revenue for the state, but we also believe that it may have the reverse effect, especially when there is a shortfall of revenue from other sources. Overtaxation can bring about an undesirable situation where private investment is broadly discouraged and, as a result, overall revenues fall. In the global environment where T&T…
Plan of a tax: The FY 2018 budget introduces a number of new taxes as part of efforts to lower the fiscal deficitOBGplus
Tax reform is a critical issue for Trinidad and Tobago, as the island nation struggles with ineffective collection and does not raise enough revenue to cover government expenditure. Statistics compiled by the OECD found that T&T collected tax revenue worth 22.9% of GDP in 2016, an amount in line with the 22.7% average of 25 Latin American and Caribbean countries that year, but less than the OECD average of 34.3%. T&T is, therefore, working to implement an array of new duties across various…
Little by little: Small businesses and entrepreneurs are being tapped to help drive economic diversificationOBGplus
One key strategy for improving the performance of Trinidad & Tobago’s economy is strengthening the country’s base of small and medium-sized enterprises (SMEs). Developing this class of businesses is expected to help create formal sector jobs, diversify GDP, and reduce dependence on oil and gas exports. Available Resources The government is undertaking several initiatives to support small businesses through agencies such as the National Entrepreneurship Development Company (NEDCO)…
Business Barometer: Trinidad and Tobago CEO Survey:OBGplus
Progress on fiscal consolidation and a recent rebound in commodity prices have led to a more optimistic medium-term outlook among CEOs in Trinidad and Tobago. In our previous OBG Business Barometer: Trinidad and Tobago CEO Survey, released in late 2017, 57% of C-suite executives had positive expectations for the coming 12 months, which improved to 69% in our latest results from July 2018. Furthermore, over two-thirds say they are likely or very likely to make a significant capital investment in the coming year. This is perhaps due in part to the country’s favourable tax environment, which 64% of respondents describe as competitive or very…
How are Trinidad and Tobago’s: recent economic reforms affecting the growth outlook?OBGplus
In June 2018 the IMF released a statement on Trinidad and Tobago, embracing the reforms undertaken by the twin-island sovereign state in recent months. After two years of economic recession, the supranational institution projected a return to growth in 2018. While such a recession is to be expected in a country that is very dependent on its commodities – particularly gas reserves, in the case of T&T – the reforms could be a game changer. The rebound in commodity prices is certainly welcome news, but the progress towards fiscal consolidation and economic diversification is even more significant for the sustainability of T&T’s…
Market overhaul: Derek Chin, Chairperson, Movie Towne, on the need for structural reformsOBGplus
Interview:Derek Chin Will 2018 bring an end to the contraction cycle? DEREK CHIN: I do not think T&T has seen the bottom just yet. Despite the announcement of major construction projects and other stimuli, few of these strategies alone could effectively create the net revenue to balance the fiscal deficit. The government is markedly against the depreciation of the T&T dollar, and the foreign currency shortfall over the past years will continue with very little incoming capital from…
Tax liabilities: Impacts of the trend towards lower corporate tax rates on developed and developing economiesOBGplus
Recent decades have seen a downward convergence in corporate tax regimes as advanced, emerging and developing economies moved to grab a bigger slice of the global investment pie. Headline corporate tax rates have fallen by 20 percentage points since the early 1980s. Alongside lower average rates, special tax incentives aimed at capturing investment have emerged, further reducing the effective rates paid by transnational corporations. In the aftermath of the 2007-08 global financial crisis, many countries were compelled to slash spending and raise revenue in order to rein in precipitous budget deficits. Even as tax revenues as a share…
Tax liabilities: Impacts of the trend towards lower corporate tax rates on developed and developing economiesOBGplus
Recent decades have seen a downward convergence in corporate tax regimes as advanced, emerging and developing economies moved to grab a bigger slice of the global investment pie. Headline corporate tax rates have fallen by 20 percentage points since the early 1980s. Alongside lower average rates, special tax incentives aimed at capturing investment have emerged, further reducing the effective rates paid by transnational corporations. In the aftermath of the 2007-08 global financial crisis, many countries were compelled to slash spending and raise revenue in order to rein in precipitous budget deficits. Even as tax revenues as a share…
