Prime Minister Patrick Manning’s 2005 (Can) $7 billion budget
reduced the surcharge on imported chicken and slashed VAT from certain
foods, but he continues to be heavily criticised for creating the
dependency syndrome of the 1970s.
The October 8 budget, which is (Can) $1.2 billion
more than last year’s, and which has been set at an oil price of
(US) $25, had among its highlights:
• Increase in the minimum wage from (Can) $1.75
to (Can) $2.25
• Reduction of prices of powdered milk, split
peas, black eye beans and cheese
• No VAT on brown sugar, cocoa powder, coffee,
mauby and orange juice
• Reduction on surcharge on chicken and turkey
parts from 86 percent to 40 percent
• Increase in duty-free allowance from (Can) $300
to (Can) $750
• Increase in personal allowance tax
• Increase in old age pension from (Can) $250 to
• Increase in public assistance by (Can) $37
• Free medical care at the Eric Williams Medical
"Let the good times roll" and
"Survival budget" were two headlines in the following day’s
The budget has forced owners of bakeries and fast
food outlets to state that prices will be slashed by November. Those
business people said there were a number of increases in the cost of
running business, among them higher wages, insurance, security and
higher prices for some raw materials, which would work against any
reduction in prices to consumers. Ron Austin, president of the Bakers’
Association, said on October 11 that, "No decision has been made
to reduce the price of bread. In the meantime, it remains an open
market for the 200 estimated bakeries in the country."
Hasheed Amin, owner of Amin’s chain of roti
shops, said, "Even if the price of chicken goes down, we still
have to pay more for labour, oil and other (cooking)
The removal of VAT from brown sugar will have
little effect on the price of soft drinks, at least those manufactured
by S.M. Jaleel. "We are not affected by the
removal of VAT (from brown sugar) because we use granulated sugar in
our production," said an official.
Consumer activist Hazel Brown, who is usually
speaking out for the poor, accused the government of crippling the
poultry industry by reducing the surcharge on imported chicken.
"I don’t know how we could substitute
something we know nothing about to destroy a local industry,"
said the outspoken Brown. "This will affect the local market,
which affects a lot of women. You get a solution that causes more
problems than you had before"
Poultry producers feel betrayed. Ronnie Mohammed,
vice-president of Nutrimix, the country’s largest poultry producer,
said the government’s move was like a stab in the back since the
company was being asked to compete with Brazil and the US, which the
World Trade Organisation has ruled are receiving subsidies.
The budget has come in for heavy criticism by the
business sector. The South Chamber of Industry and Commerce slammed
the government, which is on a heavy drive to make Trinidad and Tobago
a developed nation by 2020, for its lack of vision.
"In terms of the overall picture painted by
the budget, it is clear that we are not moving any closer to the dream
of developed country status," the Chamber said. "While the
budget indicates that the country’s GDP growth rates will remain
healthy over the medium-term, it does not indicate the sort of
positive growth rates needed to transform Trinidad and Tobago to a
developed country by 2020."
The San Juan Business Association noted with
concern the minimum wage increase. President Gail Merhair said,
"We are concerned about the increase in the minimum wage to
[(Can) $2.25]. This could send the inflation rate up and could mean
that you’ve given with one hand and taken back with the other. With
this move, that very unemployment rate of 7.8 percent could go up
rather than down."
The accounting firm Ernst and Young criticised the
government’s social programmes as announced in the budget. Referring
to such programmes as youth training, assistance with family
dysfunction, poverty alleviation through pension increases, the
company said these programmes fall short of developing the country’s
human resources in a manner to make them independent and build
However, Ernst and Young applauded three pillars of
the government’s economy strategy: maximisation of returns from the
energy sector, diversification of the economy, and sharing the country’s
The firm warned that unless the social development
of the country is addressed in a meaningful and sustainable way, the
vision for First World status will not be achieved, regardless of the
favourable economic factors.
Manning had said that inflation had been kept in
check, coming in at 3.8 percent in 2003 and 3.3 percent in the 12
months ending in August 2004, and that GDP was projected at 6.2
percent for 2004. The government can afford to smile and deliver
goodies for many.
As of October 12, oil futures prices advanced to a
high of (US) $54, but the government explained prior to the budget
that this country does not benefit from such high prices as its oil
production is sold at preset prices. The price of oil on the world
market also depends on the quality of the crude. Oil prices were this
year 80 percent higher than one year ago.