Finance Minister Colm Imbert urged his fellow ministers and their respective ministries to “burn the midnight oil” and use the money allocated for the Development Programme.
“Because there it creates economic activity and creates jobs. That’s where you create income for people,” he said during the 2022-2023 budget debate in the Senate on Wednesday.
Imbert said the budget was optimistic in fiscal year 2023 with a Development Program of $6.2 billion and he hoped it would be realized.
“The Ministry of Finance would push all ministries to use the funds in the 2023 Development Program, which is very significant.
He said if you look at the current spending on the PSIP (Public Sector Investment Program) in 2022, it was approximately $3.6 billion. He said 39 per cent of the PSIP was going towards infrastructure development, 31 per cent on spending on people, 12 per cent on building a globally competitive business and 17 per cent on providing “good governance”.
He said that the Ministry of Works will have over 300 million dollars for the rehabilitation and repair of roads. Also, a total of $200 million was allocated to the secondary road company for the repair of secondary roads.
Imbert said the government had to be very careful about raising personal income tax – which results in lower tax rates – because it was a huge amount of money the government would have to give up.
Noting that this was the third increase under this PNM Government, he said information received from the BIR (Board of Internal Revenue) was that the increase in personal income tax (from $7,000) to $7,500 a month, would catch 300,000 taxpayers, practically. half of people on the PAYE system.
He said the taxpayer pool (in T&T) is just over 600,000 people. He said that if the government raised personal tax to $96,000, the loss of revenue would be $900 million a year.
“And that’s why we settled on $7,500, which still causes a tax loss of $450 million a year,” he said.
Imbert said “in theory”, increasing the personal tax allowance puts more disposable income in the hands of consumers “which you expect them to spend and therefore the multiplier effect comes into play. So you ( The government) won’t get up to $450 million in revenue, but expect the effect on GDP to be as much as double that. But that’s all theory… you have to see how these things work in practice.” said Imbert.
“It would put an extra $100 a year in the pockets of taxpayers in the lowest bracket,” he said.
Although he said there was “extreme volatility” in oil and gas prices, Imbert defended the oil and gas price estimates (US$92.50 per barrel for oil and US$6 per mmbtu for gas) on which it was forecast the 2023 budget.
Saying that those who said the government’s forecast of these prices was bad should do more research, he indicated that based on data from the Ministry of Energy, the average price of domestic crude oil in the period January-August 2022 was $102.06 per barrel, while the average price. for gas it was $6.85 per mmbtu.
Noting that the government had consulted with a number of international agencies, including the International Energy Agency, the US Energy Information Administration, the World Bank, the IMF and Standard and Poors, Imbert stated: “I suspect that our price (rating) of oil is probably on target, maybe a bit above and I’m quite confident that the price (valuation) of gas is below forecasts and given that we get two-thirds of our (energy) revenue from gas and one-third from oil , I think our revenue estimates are well calculated.”
Noting that the price forecast in the 2021-2022 budget for oil was US$65, which was US$35 less than realized, and a gas price of US$3.75 per mmbtu, which was close to US$3 less about the actual price, Imbert said, “It’s intriguing that when you underprice, nobody says anything, nobody says you’ve made a mistake,” but “when you overprice, you’re considered to have made ‘a fatal mistake.’
