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NWU: BUDGET SHOWS PP CLASS BIAS

posted 7 Oct 2012, 22:55 by Gerry Kangalee   [ updated 10 Oct 2012, 19:07 ]

2012-10-07

NWU: BUDGET SHOWS PP CLASS BIAS



The Howai budget is long on declaration, but short on explanation. The Ministry of Finance’s position on the cost of fuel in T&T is a crystal clear demonstration of the philosophical mindset of the PP government. The statements and decisions contained in the budget and further clarification at a meeting with the Energy Chamber show clearly that the Government intends to force citizens of this country to buy fuel at world market prices. 

Premium has already reached that level and regular and diesel are to follow soon. The National Workers Union insists that the only deterrent to this is decisive intervention by the working people. The Government’s claim that it can no longer afford the alleged $4.4 billion per annum in what is commonly called “subsidies” deserves closer scrutiny and some digging below the surface. 
 
1. During the State of Emergency last year, police “discovered” a thriving trade in the illegal sale of diesel fuel. During the investigations it was revealed that this activity was going on for many years and huge volumes of diesel were involved, resulting in losses to the treasury of hundreds of millions of dollars. 
 
The Ministry of Energy was mandated to put an immediate stop to this activity. What are the findings of those investigations? Have the volumes of the illicit trade been accurately determined? Has anybody been arrested? The Minister of Energy has been quoted as saying “In fiscal 2012 alone the subsidy will be around $4.47 billion”. If this figure is equal to or greater than 2011 then it means that the illegal bunkering of fuel continues unabated. Should this not be of greater priority to the country than increasing prices of fuel on the citizens? 
 
2. This so-called subsidy needs to be fully explained as most people will form the view that the price we pay at the pump is below PRODUCTION costs and the “subsidy” makes up the difference to the suppliers i.e. Petrotrin and NP. This is not the case; the price we pay at the pump includes cost of production plus excise duties, vat and other taxes. This “subsidy” is really the difference between the price at the pump (inclusive of production costs) and WORLD MARKET price. 

The Ministry and the Minister of Energy are quoted in various reports as saying, (i) the projected “subsidy” for 2012 is $4.47 billion (ii) the subsidy on diesel is $2.71 per litre and consumes 52% of the annual cost (iii) the figure for super is $1.83 per litre and consumes 41% of the annual expenditure (iii) the subsidy on premium was .73 per litre and consumes 6% of the total figure. 
 
3. Based on the above information, calculations will show that the annual consumption of diesel is approximately 844 million litres and super is 986 million litres. Therefore diesel use is 86% of that of super gas. Does this seem consistent with our experience at the gas station that diesel sales almost equate that of super gasoline? Most gas stations have only ONE pump to sell diesel while they will have six or more pumps to dispense super. Of course not all diesel is dispensed at the gas station pump. This highlights the need for transparency from the government when dealing with this issue. 

4. The price on premium gas was increased by $1.75; this must mean that a profit of $1.02 per litre is being extracted from citizens. 
 
If a farmer grows tomatoes at a production cost of $2.00 per pound and the tomatoes are retailed at $3.50 per pound will the farmer sell all his produce to the retailer and then for his personal use go to the market and buy at the higher prices or will he consume some of the tomatoes at the price which he produced them for himself? 
 
The National Workers Union holds that the oil and gas produced in T&T do not belong to any minister or any Government; it belongs to the People of this country. Energy resource is one of the most pervasive that exists. It impacts on almost every facet of our lives and is one of the best methods of having the owners of this asset enjoy their God-given resource. 
 
On this issue of the “subsidy” let’s look at some other measures listed in the budget.

The Minister of Finance announced the following measures: 
 
(a) Reduction from 33% to 25% in SPT (Supplementary Petroleum Taxes) on “new field development”. This “incentive” is to encourage mainly transnational corporations (TNC’s) to bring fields which are known to have oil into production as the TNC’s are not pleased with the old rates and have refused to produce in those fields. These are companies whose annual revenue outstrips T&T’s GDP many times over. 
 
(b) Tax concessions for large housing and land developers and to big business for constructing multi-storey buildings and car parks. (Note there is nothing for individual home owners). This sector has long been identified as one of the areas for laundering money. During the decline of the economy since 2008, the real estate industry has remained unscathed. 
  
(c) 150% tax deductions for companies which hire Cepep and URP workers. One can easily imagine that previous employment in Cepep and URP will now constitute a vital part of job-seekers resume: a perfect recipe for confusion at best but rampant corruption in the main. 

(d) Duty free imports for light manufacturing over the next two years and the list goes on and on. 

The wisdom or foolishness of these measures is not being debated at this time but rather the fact that they will result in millions of dollars that should have been collected by the State remaining in the hands of big business. This is not called SUBSIDY but is dressed up and called INCENTIVES. What are incentives for some are subsidies for others or as the calypsonian said: the poor get handouts; the rich get bailouts. 

The PP is continuing the trends of all governments since the mid-1980s of embracing IMF and World Bank orthodoxy. Budgetary directions are about attempting to balance income with expenditure while providing “incentives” for family, friends and financiers. 
 
The National Workers Union calls on the people of T&T to demand from the government full disclosure of information relative to the quantity of fuel products sold in the country, their respective costs of production and the actual dollar figures involved in apportioning the so-called “subsidy” to them. 

The National Workers Union, further, calls on the government to disclose the quantum of taxes applied to the fuel products and how the international posted prices of these fuels affect how the so-called subsidy is calculated. There must be transparency in terms of fuel product pricing. 
 
The National Workers Union also calls upon the government to inform the country as to the amount of revenue given up due to the changes in the tax regime of the energy companies and the amount of revenue given up because of the tax concessions for manufacturers and to estimate future loss of revenue because of the waiving of taxes on real estate commercial development. 

The budget is a document steeped in class bias and clearly serves the interests of the capitalists and hurts the interests of working people and the poor. 

The National Workers Union advises that this will only end when the People of this country decide to break the cycle of turning to one or the other group of white collar bandits and political hustlers and refuse to allow ourselves to continue being divided on issues such as race and intervene on the important issues which determine our lives and shape them in our interest. 

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FOR FURTHER INFORMATION CONTACT:

Gerry Kangalee (National Education and Research Officer – Cell: 785-7637)
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