President and CEO of the T&T Energy Chamber Thackwray Driver yesterday warned that higher corporation taxes will chase off potential investors.
He is also disappointed that the Supplemental Petroleum Tax (SPT) was not addressed in the 2016/2017 Budget presented by Finance Minister Colm Imbert yesterday.
In an immediate response to the fiscal package, Driver said he had been hoping for a clear statement on the SPT which is imposed on income generated from production of crude oil. “If there is no clarity about what taxes are in future then this will be a disincentive to investors,” he said.
Drive, who said the Chamber is looking forward to dialogue with the Government, explained how the energy sector would be affected by Government’s fiscal plans for 2016/2017: “There are really no changes for the energy sector, except ongoing discussions about changes in corporation tax which will affect the energy service sector for investment.
“People are not making money and GDP has declined by 25 per cent, so companies are in survival mode. The higher tax rate means that there will be less investments. Right now they are not profitable, they are barely surviving. Increases in corporation taxes means people who have investment capital are going to look at investments in the Caribbean and the rest of the world.”
Driver expressed support for the decision to sell NGC’s 51 per cent stake in Phoenix Park. Asked whether the budget created a reasonable environment for investment for companies like bpTT, which has threatened to review it’s $5 billion investment if Government does not provide clarity on future natural gas supplies, Driver said: “The minister spoke about ongoing dialogue. There was no announcement of the Gas Master Plan.”
Asked whether the government should be focusing on collecting outstanding taxes owed by energy companies like Petrotrin which owed $549 million as of December 2015, Driver said this will be addressed when the T&T Revenue Authority is introduced.
Commenting on the fuel subsidy, he said: “Government is going about it in the right manner. Over the next few years they have to create clarity on the future pricing of petroleums gets as oil and gas prices change.” Driver said T&T needs a liberalized system of fuel prices.
Former Energy Minister Kevin Ramnarine also said investments might dry up beyond 2018 if Government did not address concerns about taxation.
“We need companies to invest but they will not if there is no clarity of policy from the government,” he said. According to Ramnarine, the Petroleum Tax has been an issue for the past 12 months because of low oil prices. He said Government has to be careful about IMF recommendations on petroleum taxes.
“I am not aware that the IMF is well known for having expertise in oil and gas fiscal regimes, so I will be careful in implementing what they have offered,” he said.