May 7, 2013

Concessions – cause for concern

The loss in government revenue because of discretionary concessions is a cause for concern.{{more}}

Prime Minister Dr Ralph Gonsalves said during a press conference last week Monday that measures were needed to regulate discretionary concessions.

“I can’t stifle economic activity, so there are certain things you can’t touch, even though you know you are losing revenue, but there are other things, including some of the discretionary concessions we need to tighten up,” Gonsalves told members of the media.

According to the Prime Minister, loss in duty as a result of fiscal concessions amounted to $113.57 million in 2012; in 2011 the figure stood at $72.36 million.

Gonsalves explained that there are various types of concessions available.

He said legislative concessions are those which are made available to manufacturers and hoteliers and are aimed at creating wealth and job creation. Under this category, the loss in 2012 reached $146 million up from $107 million in 2011.

Statutory bodies such as VINLEC, Port Authority and the Central Water and Sewerage Authority (CWSA) also get concessions and this amounted to $94.6 million last year compared to $61 million in 2011.

“They have been doing a lot of work and have been getting more concessions,” Gonsalves said, but added that this was something that needed to be addressed.

The central government’s concessions amounted to $22 million in 2012 down from $27 million in 2011 and concessions to returning nationals have remained almost constant, hovering around $2 and $3 million over the last two yearS, Gonsalves said.

The problem, however, was with the special cabinet concessions which are concessions that were not legislated for, but for which people and organizations apply.

He gave the example of an individual who may receive 50 per cent duty free concessions for bringing in heavy equipment.

“Because you want to help with the road programmes and these were people who assisted after natural disasters,” the Prime Minister explained.

Churches also receive a lot of cabinet concessions, because of their social function, Gonsalves explained.

“And sometimes if they don’t get concessions, they cannot do what they want to do,” he said.

But this category of concessions needed to be reviewed, the Prime Minister said, not those for churches, however.

“I am raising the issue to show the extent of revenues which are lost,” Gonsalves said.

“Very often, these things add up and clearly I have to look at expenditure and I have to look at revenue,” he continued.

Gonsalves said that often applications for exemptions come in from groups of persons for exemptions on departure tax and other concessions of that sort.

“The point is we can’t just give away, give away,” he said.

People needed to keep in mind that the country has remained afloat over the past four and a half years, amidst the global economic downturn and other factors, including natural disasters, which forced the government to find ways and means to generate revenue, Gonsalves said. (DD)