Question

Evaluate the National Budget 2021 for the Trinidad economy and discuss its potential impact on the country’s ability to diversify its export base. (1200-1500 words)

Answer 1

Finance Minister Colm Imbert delivered a three-hour-long presentation of Trinidad and Tobago's 2021 budget in Parliament on Monday.

The budget, delivered in light of depressed oil prices and in the context of a pandemic, placed priority on agriculture and increased use of local content, the digital transformation of the country for innovation, growth, and education, as well as construction.

A few takes from it are as follows:

1. Government has approved a $500 million agriculture stimulus package in 2021, additionally to regular budgetary allocations. it's promised to extend the utilization of digital technology in agriculture and specialise in food security in light of an intolerable food import bill.
The government also will check out developing downstream agriculture industries and creating a robust agri-business eco-system. Imbert said food security must be a serious activity within the new economy.
He said the govt also will guarantee state agricultural purchasing and distribution of local content for the varsity feeding programme, public hospitals and therefore the protective services.
2. Over subsequent ten years the HDC will deliver over 25,000 homes on state land and can provide a mixture of housing solutions for people of various levels of incomes and socio-economic standings. consistent with Imbert's breakdown, 10,000 starter homes at a price of $250,000 are going to be offered for a monthly payment of $925 with no downpayment. a further 5,000 affordable homes are going to be available at a price of between $350,000 to $500,000, starting with a five per cent downpayment. Another 5,000 are expected to be built, valued between $650,000 and $900,000 for middle-income buyers. Young professionals also will have access to homes built by the HDC valued between $1 million and $1.5 million.
3. the govt is freezing the filling of all vacancies within the public service for a year and considering extending the retirement age to 65.
4. the govt will create an electronic funds transfer window to permit payments, like taxes, to be completed electronically.
5. The liquid petroleum fuel market are going to be liberalised, in other words, the fuel subsidy are going to be removed as of January 2021. Prices are going to be supported the market and dealers are going to be ready to set their own margins. Wholesale margins will remain fixed for the nonce .
NP gas stations are going to be privatised/sold, with first preference to existing dealers.
6. Government will extend the salary relief grant to December 2020 for people that add the creative and cultural industries. Imbert said the govt would establish an area content guideline for local media houses and by 2022, provide incentives to extend the local music played on radio stations.
7.Anyone earning $7,000 per month or less are going to be exempt from tax because the personal tax allowanced has ben raised from $72,000 to $84,000. it'll become in January 2021.
8. Government has allocated $50 million for the acquisition of computers for needy students. this may be wiped out a joint effort between the ministries of Education; Public Information and Digital Transformation; and Social Development and Family Services.
Government has also introduced a programme to deliver wireless hotspots for college kids without internet access. The devices are going to be provided for 45,000 students.
The government also will remove all taxes on mobile phones and software. Imbert also announced technology-based tax allowances for businesses.
9. Government will check out other options for the acquisition of the Pointe-a-Pierre petroleum refinery if an agreement isn't finalised with Patriotic Energies and Technologies by October 31.
10. The new fast ferry will arrive and enter service on the seabridge by the top of December . it'll be ready to carry quite 900 passengers, and 250 cars and can take but three hours to urge to Tobago.
11. The Ministry of Works has been advised to seek out a private-sector partner to run commercial operations at the Port of Port of Spain, with the inter-island ferry remaining under the Port Authority.
12. the govt will remove concessions on new cars, making it costlier to import them, and can decrease the age of foreign-used cars which will be imported from five years to 3 from January 2021.
13. Imbert announced mandatory valuations in order that the land tax are often determined.

A few things that will get impacted by it are as follows:

1) Fuel prices
Fuel suppliers are going to be allowed to line their own prices and therefore the minister said it'll mean that when prices are low, the value are going to be lower but once world prices rise, gas prices will rise also .

The State will provide the gas to the suppliers at prices it'll announce at the beginning of every month. the govt also will offer purchasable to non-public owners, all gas stations controlled by NP.

2) Less tax
Personal Income Tax allowances will rise from $72,000 to $84,000 once a year . It means individuals earning $7,000 or less are going to be exempt from paying any tax .
This measure will become effective in January 2021.
“This will put additional income of $3,500 within the pockets of over $250,000 individual taxpayers,” the minister told the Parliament in his presentation.
This will cost Government $750 million in tax revenue but Minister Imbert said this relief will help stimulate demand within the economy.

3) Imported automobile taxes
The minister announced the removal of tax concessions on the importation of personal automobiles , which he said has resulted during a leakage of US$400 million annually .
Imported private vehicles will now attract customs , Value Added Tax (VAT) and other taxes from October 20, 2020.

4) New homeowners
The purchase of homes will become cheaper for brand spanking new homeowners with the amending of the stamp tax threshold from $1.5m to $2m. this may save first-time homeowners up to $28,000 in stamp tax .
It will begin in January 2021.

5) Cigarette, luxury goods taxes
Taxes are going to be implemented on the utilization of cigarettes, with duties rising by 20 per cent from October 2020.
The government also will implement a 200 per cent rise altogether penalties for the sale of alcohol and tobacco to minors from January 2021.
VAT of 12.5 per cent are going to be restored to luxury imported foods, including lobster, strawberry, champagne, apples, grapes et al. . A full list are going to be published before it takes effect on January 1, 2021.

6) Freeze on employment
The minister announced a freeze within the filling of vacant posts within the general public Sector for the amount of 1 year.

7) Taxes on digital equipment
All taxes on digital equipment are going to be removed. this may include mobile phones and computers and tax allowances of 150 per cent with a cap of $3 million are going to be available to businesses involved in technology.
Internet ‘MiFi’ devices – mobile hotspots – are going to be made available to 45,000 students who don’t have internet in their homes or surrounding devices. this may begin within the half-moon of calendar 2021.
A total of $50 million are going to be allocated to the acquisition of computers for needy students. this may be a joint effort between the ministries of
Education, Public Admin and Digital Transformation and Social Development and Family Services.

8) Expenditure/revenue
The Budget has been predicated on an estimated oil price folks $45 per barrel and a gas price of US $3 per mmbtu.
Total revenue is estimated to be $41.364 billion and expenditure has been put at $49.573 billion.
That amounts to a fiscal deficit of $8.209 billion.
The allocation to Tobago is $2.134 billion. That amounts to $1.916 billion for Recurrent Expenditure, $200 million for cost and $18 for URP.