University of the West Indies Lecturer Dr. Regan Deonanan says implementing transfer pricing measures will improve the country’s revenue collection and increase the amount of foreign exchange.
Reiterating Finance Minister Davendranath Tancoo’s statistics on the amount of money that Trinidad and Tobago has lost because of transfer pricing, he explained what the measure could mean for the country’s revenue base.
“An ECLAC Report indicated, a study, indicated that TT$17.5 billion was lost over an eight-year period through transfer pricing. And if you’re not familiar with transfer pricing, what that is is essentially a multinational ability to transfer assets abroad to avoid taxation. So what it means is that the country in which they are operating lose revenue because of lost taxes.”
Dr. Deonanan was speaking at the UWI Post-Budget Forum organised by the Conference on the Economy and the Department of Economics on Thursday.
He noted that thIS measure will also have added benefits.
“If we correct that, we’re going to see more revenue and foreign exchange from the existing resources, the existing pool that we have.”
Meanwhile, Economist and Independent Senator Dr. Marlene Attzs said paying the promised 10% to the country’s public servants could have a negative impact on the economy.
“It also means that since the government now has to find this additional $204 million to spend in recurrent expenditure, it will crowd out other social spending if other areas underperform, or if the budget is predicated on $73 for oil and $4 for gas, anything that falls short of that it means the government doesn’t have any fiscal space, so it means that it may not be able to meet its commitment.”
Dr. Attzs outlined the possible consequences of the decision: “There is also the possibility that with those higher wages and the back pay we might find ourselves in an inflationary spiral. People will consume more, we have limited goods and we might find ourselves in an inflationary spiral.”