T&T Chamber tells Gov't: Manage the Exchange Rate
The Trinidad and Tobago Chamber of Industry and Commerce is calling on the Government to review the TT to US exchange rate as its current form is "overvalued" and "unsustainable."
The Chamber made the comment as it proposed a number of recommendations to Finance Minister Colm Imbert ahead of the 2017/2018 budget, including transparency and value for money in terms of Government expenditure, widening the tax net and an evaluation of the TT dollar.
The President and other senior members of the Chamber met with the Minister, Permanent Secretaries and advisors of the Ministry recently.
In a statement issued on Wednesday, the Chamber said consultation with its membership led to focused attention on key areas including; national efficiency and competitiveness, the establishment of the TT Revenue Authority, support for business innovation and start-ups, incentivizing exports, transformation and diversification, value for money and exchange rate management.
According to the Chamber, a more dynamic management of the exchange rate is required alongside an inflation goal. It said at present, the current exchange rate appears to be "overvalued and unsustainable."
“This in no way fosters diversification of our economy and competitiveness in the export of goods and services,” it said.
The Chamber also called for a more critical review of ‘value for money’ initiatives to foster greater transparency and accountability in government expenditure.
It said for the past two years, the National Security Ministry has received the largest budgetary allocation while there remains uncertainty about whether the country has derived the best return on its investment. The Chamber said despite this, it acknowledges that crime needs to be dealt with through effective legislation, full support of the Judiciary, enabling the Police Service Commission and advocating the appointment of a permanent Commissioner of Police.
Meanwhile, the Chamber highlighted the need for an increase in national efficiency in order for T&T’s domestic goods and services to become more competitive. It said as such, the implementation of clear strategies is required, to encourage productivity and efficiency through management of make-work programmes and over employment by the public sector.
Calls were also made for the broadening of the tax net through the introduction of the TT Revenue Authority, which the Chamber believes would yield additional revenue to help close the budgetary gap.
“Government should consider this alternative, as opposed to the continued application of higher taxes to those who are already compliant,” it said.
The T&T Chamber's recommendations also include a call for support for an innovative business ecosystem, through “significant tax incentives” for investment in business start-ups, as well as increased exports.
“We suggest the implementation of co-funding arrangements with organizations possessing the proven capacity to execute on development initiatives and by matching funds for venture investments. Yet another item for consideration is that of encouraging increased export of goods and services through significant tax incentives which would be paid based on the increased foreign exchange earned over prior year. Tax incentives will only be paid based on increased investments and foreign exchange earnings.”
According to the T&T Chamber, diversification is urgently required to reduce T&T’s long-standing dependence on the energy sector. The Chamber said this can be achieved through a total transformation of the local business environment through incentives created for the non-energy sectors such as manufacturing, agro-processing and tourism.The Chamber added that