He giveth and he taketh away.
And in an almost “Biblical sense” this is what Finance Minister Colm Imbert did, said economist Dr Marlene Attzs as she examined the 2022/2023 fiscal package presented on Monday.
For instance, Dr Attzs believes the personal income tax exemption limit increases will not equate to additional disposable income for the average citizen given the already high inflation the country faces.
During his presentation Imbert said those earning $7,500 or less a month will no longer have to pay income tax which will take effect from January 1, 2023.
According to Dr Attzs this could be a way of addressing the calls for the wage negotiations indirectly so people who fall within this catchment can get more money in their pocket.
But there’s a “catch 22.”
“Overall, while there were some allowances made I don’t know if it’s necessarily going to help with the overall state of lives and livelihood and that cost of living.
“I think people are going to be a little confused because they are going to realise while they have a bit more money. This is not necessarily going to lend itself into real disposable income,” Dr Attzs explained, noting that inflation remains high which is now going to be exacerbated by the increase in fuel prices at the pump.
As of Tuesday, the prices of premium and super fuel were raised by $1/litre and diesel by 50 cents.
Premium fuel will now be $7.75 per litre, super $6.97 per litre, diesel $4.41 per litre while kerosene will retail at $4.50 per litre.
Dr. Attzs posited that even though the minister barely touched diesel, the reality is many will face higher prices for transportation resulting in further inflationary pressure.
“While the minister says for public transportation and to transport goods it is diesel, I don’t think that distinction and that demarcation is going to be made.
“I think there will be price increases and there will be pain in terms of transportation and that will then feed its way into the supermarkets prices etc. It’s almost “Biblical;” he giveth and he taketh away,” Dr Attzs told the Business Guardian (BG).
The economist said she would not describe Imbert’s budget as fair but rather as a “mixed bag” and warned that these convulsions will worsen, noting that property tax, for instance is still looming large, which will only exacerbate some of the pressure people are already feeling.
Government intends to begin collecting property tax in 2023.
Legal framework is already in place but simple amendments are required before the end of 2022, Imbert said.
In terms of tackling crime and beefing-up national security measures, Attzs said she hoped Imbert would have said more.
“Not withstanding the grave concerns the country has about the crime situation and the fact that the crime situation of itself is an impediment to the ease of doing business, certainly, as a headline item I thought more might have been said about what the Government intends to do to stamp out crime,” Attzs explained.
Additionally, she described the increase in firearms user’s licence (FUL) fees as “counter-intuitive.”
During his budget presentation, Imbert said all firearms user’s FUL fees will increase by 100 per cent.
Government also intends to restrict civilians’ ownership of assault weapons and associated ammunition.
He said while the measures would require amendments to the Firearms Act Chapter 16:01, the price hikes will take effect from January 1.
While Dr Attzs agreed that part of the crime scourge is the amount of illegal firearms on the streets other matters should be looked at.
“I think persons who have applied for FULs are in fact, trying to do so to protect themselves and particularly now given the spate of crime we are seeing in T&T,” she argued.
On the energy sector, Dr. Attzs said much of T&T’s economic prosperity is still being predicated on oil and gas, but she said while it is appreciated there is a transition process to move away from oil and gas, the minister revised many taxes essentially to incentivise additional production.
Dr Attzs said this showed Imbert recognised the country’s production levels are very low which the Prime Minister himself said a few weeks ago.
“So I’m not too sure how we are going to deal with that in terms of these taxes he has reduced and whether in fact they will allow for the kind of traction he hopes to get in terms of increased production,” Dr Attzs added.
In terms of some of the institutional framework initiatives, the economist termed some as interesting while others as old proposals. One example of an old proposal was the statistical institute which has been on the books since 2018.
She told the BG that the success of the announced merger of several agencies like exporTT, invesTT to promote investment, exports and forex earnings is better left to be seen.
Another interesting move, Dr Attzs said, is the separation of the water resources agency from WASA itself.
She noted there were conversations for many years, possibly since 2017 /2018, during one of Imbert’s very early budget presentations, where he talked about State enterprises and the Government needing to review its expenditure on these State enterprises because it simply wasn’t sustainable.
“That conversation has not emerged. What we heard of, is some tweaking of the WASA model where you’re going to essentially extract or divorce certain functions, the water resources agency is going to be divorced from WASA itself….I am not too sure how that will help us achieve a more efficient water supply, which is one of the rationales the minister identified,” Dr Attzs said.
She said another interesting measure is building out three companies in the HDC to create greater efficiency.
However, Dr Attzs argued while Government is trying to manage expenditure she’s unsure whether these new companies are going to require separate sets of resources.
On other sectors, she noted additional attention was paid to agriculture, particularly youth in agriculture which is consistent with some of the measures of the Youth Ministry, recognising that ageing farmers are leaving the industry.