Ever wondered what difference seven months can make?
Well, let us put the wondering to rest. It is no secret that the impact of the coronavirus (COVID-19) pandemic has had a negative impact on the economy. The slowdown in the economy has caused many employers, especially in hard-hit industries like tourism, entertainment and education, to terminate their employees. With this in mind, government rolled out several initiatives aimed at helping those who were directly impacted by the COVID-19 pandemic. Minister of Finance Colm Imbert, in delivering the 3-hour long 2021 Fiscal package themed “Resetting The Economy For Growth And Innovation” on Monday October 5th, 2020 said it was government’s aim to finance more measures to fight against the COVID-19 pandemic.
Fiscal deficit of $8.209B
Fiscal 2021 allocations will be:
• Education and Training: $7.973B
• Health: $6.050B
• National Security: $5.227B
• Works and Transport: $2.956B
• Public Utilities: $2.091B
• Rural Development and Local Gov’t: $1.642B
• Agriculture : $1.198B
• Housing: $1B
For many years we have heard about the lack of food security, with this in mind Minister Imbert noted that the food import bill was no longer tolerable, as he says it resulted in not only heavy outflow of foreign exchange but it contributed to inflation. The government will now be providing a TT$500M Stimulus Package to support this sector. Perhaps one of the sectors which received the most encouraging news as it was promised to be a tax-free industry.
This country has a long history of promises of advancing the Information and Communication Technology agenda across the government. The push for a more digitalised T&T has been more aggressive with the onset of COVID-19 which pushed companies to shift their focus from gradual digitisation to embracing it immediately. Some of the measures announced to ease the way of doing business include the introduction of e-filings, online payments and virtual court hearings. With the introduction of online classes there surfaced many underlying issues, including the lack of devices for some students. As a result, TT$50M was allocated for laptops for needy students and internet Mi-Fi devices will be made available to 45,000 students. Taxes are also expected to be removed on all mobile phones and digital equipment. Did someone say T&T can be the next digital hub of the Caribbean? Something to explore.
The energy sector continues to be faced with numerous issues such as decreased natural gas production, reduction in global prices of ammonia and methanol among others. It also competes with the US which has since been getting the advantage due to cheaper shale gas prices and no gas supply issues. The International Energy Agency predicts that the COVID-19 pandemic will reduce the global demand for oil by about 9.3m barrels a day this year. In a market that is predominantly natural gas and oil production-based, they both significantly declined for the first six months of the year. Imbert noted that there have been major investments in the upstream sector by key players such as BPTT, BHP and Shell. It was also revealed that NP gas stations will be offered for sale and the fixed price margins for LPG will be removed. On the renewable energy front, government is also seeking to implement renewable energy electric power in accordance with commitments under the Paris Accord
Entertainment and Arts
To cushion the fallout, artistes have received and/or are eligible to receive short-term income relief of $5,000 as part of the government’s COVID-19 relief programme in recognition of their continued inactivity. The Salary Relief Grant and Income Support Grant Programmes will also be extended to December 2020 for workers in this industry, among others in a similar situation, to provide further financial support, where applicable. Government will also be establishing a local content guideline for local media houses; supporting the transition of creative arts from the informal sector to the formal sector. According to Imbert, initiatives geared towards improving digital literacy for local artistes will be promoted and incentives will also be provided for increasing the percentage of local music played on local music stations.
Over the next ten years government plans to deliver 25,000 new homes on state lands through their Accelerated Construction Programme.
• 10,000 starter-homes valued at $250,000 each with a monthly payment of $925 and a zero down-payment;
• 5,000 affordable homes at $350,000-$500,000 each with a monthly payment of $1,165-$1,755 with a 5 percent down payment;
• 5,000 middle income homes valued between $650,000-$900,000 with a monthly payment of $2,285-$3,160 and a 5 percent down payment;
• 5,000 housing units targeting young professionals with the units valued between $1million-$1.5 million and a monthly payment of $3,510-$5,265 and a 5 percent down payment.
One sector which has been doing its best yet has not surpassed its growth level is the manufacturing sector. Some initiatives announced are the charging of the Evolving TecKnologies and Enterprise Development Company Limited (eTecK) to facilitate commercial development in high-manufacturing areas. A few welcomed measures outlined are those in niche markets including our chocolate, our Trinidad Moruga Scorpion pepper and Moruga hill rice.
Described as an act which will be “reasonable and fair,” the government’s objective is to commence the collection of property tax in fiscal 2021, starting with residential properties. There will also be an online option to be developed for submission of information by property owners, which will be done in keeping with the government’s digitalisation thrust and COVID-19 social distancing protocols. A new aluminum industry is also being considered as well as more high-value manufacturing including but not limited to electronic assembly steelpan, textile and garment manufacturing and cosmetic, petrochemical production, inclusive of medicinal marijuana.
Personal Income Tax
Government announced plans to provide relief to working families by increasing the personal income tax exemption limit from TT$72,000 to TT$84,000 per year. As of January 1st 2021, all individuals earning TT$7,000 a month or less will now be exempt from income tax. According to Minister Imbert this will now put additional income of TT$3,000 per year into the pockets of over 250,000 individual taxpayers.
One of the hardest-hit industries by COVID-19 is, without doubt, the tourism sector. From hotels to airlines, cook to janitor, regional to international traveller - they have all been impacted. Limited recovery is predicted for this sector as the borders remain closed as a preventative measure and a vaccine is not anywhere close in sight. Added to devastating blow was the recent announcement by Prime Minister Dr Keith Rowley of the definitive cancellation of the 2021 National Carnival celebrations for 2021. Tobago, as we know thrives mainly on tourism and there are several measures which continue to roll out including the Tourism Accommodation Relief Grant; Business Relief Loans and a Soft Loan facilitated through First Citizens Bank and Republic Bank.
The Budget can be read in its entirety here: https://www.finance.gov.tt/wp-content/uploads/2020/10/Budget-Statement-2021-1.pdf