The recent collapse in global commodity prices, in particular oil and natural gas, has caused significant challenges to Trinidad and Tobago as a resource-based economy. As a result we are now forced to undertake a major re-evaluation of our economic priorities in light of the new energy paradigm. The government of T&T has signalled its intention to use the current situation as an opportunity to implement some of the long-outstanding reforms and structural adjustments essential to improving T&T’s economy.
T&T’s tax system has been plagued by a low rate of compliance and collection, which is partially attributed to an archaic bureaucratic structure that does not always lend itself to efficiency. Industrial action at the Board of Inland Revenue (BIR) in the past five years has at times paralysed the entire system. In addition to obstructing and disrupting the collection of income and corporation tax, the industrial action has also severely hampered the BIR’s ability to collect the stamp duty on real estate transactions – a significant source of state revenue.
The current economic situation has resulted in renewed attention on the need to raise efficiency in the collection of corporation tax, income tax and value-added tax. Estimates of the amount of uncollected tax are between TT$7bn ($1.1bn) and TT$15bn ($2.3bn). Proposed reforms include replacing the BIR with a new statutory corporation, vested with increased powers and responsibilities, called the Revenue Authority. It is envisioned that the new entity will be far more efficient, through the increased use of technology and new modern management systems.
At the local government level, Trinidad is divided into 14 regional corporations that currently rely on the central government to fund their service operations. This system has proven to be cumbersome and quite inefficient, and is one of the largest areas of expenditure in the national budget. Because of this, the Ministry of Local Government is now undertaking a national consultation on local government reform. Among the proposed amendments currently being discussed are: the decentralisation of the local government system by granting an increased level of autonomy and executive authority to the regional corporations; the delegation of authority from the Town and Country Planning Authority to the regional corporations with respect to certain planning and building approvals for construction projects; and allowing the regional corporations to collect and retain certain taxes within their boundaries.
There is also a need to reform the employer/ employee relationship in T&T. The Industrial Relations Act (IRA) dates back to 1972. This outdated legislation has resulted in a confrontational, if not acidic, industrial relations atmosphere, which has plagued T&T over the past 40 years. The recent attempt to re-establish a tripartite regime to bring more meaningful dialogue between government, labour and business will be used to examine the deficiencies in the IRA and other areas in need of reform.
Coupled with the reform of the IRA, a reform of the Immigration Act (IA), which was enacted in 1962, is also essential. The IA governs, inter alia, the issuance of passports, work permits, permanent residencies and visas. This act still clings to some of the less appealing phobias and stereotypes of post-colonial T&T that no longer have a place in the 21st century. The IA should be amended to ensure that it establishes a modern framework that has the ability to record and monitor all visitors and non-residents in T&T at any given time. More importantly, the IA should be amended to encourage foreign investment, by providing more incentives to non-resident individuals and companies to establish their businesses in T&T.
The current circumstances present an opportunity to implement transformational changes that would just not have been possible 12 months ago. Times of crisis create unique opportunities for change.
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