Episode Transcript
[00:00:01] Speaker A: The best insight, instant feedback, Accountability the.
[00:00:04] Speaker B: All new Talk Radio Freedom 106.5 our interview this morning. For the next 15 minutes thereabouts, we will be speaking with Mr. Mariana Brown on government jobs versus property tax and get his thoughts. Mr. Brown is a political and economic analyst and former minister in the Ministry of Finance. So we say good morning to you, Mr. Brown. How are you, sir?
[00:00:26] Speaker A: Good morning, thank you. And yourself?
[00:00:29] Speaker B: I am much better now that I got you. It was always a pleasure to chat with you and hear your thoughts on matters. I mean it's always good, you know, when you sit outside of the game, you see the plays much better.
When you are in the game, you don't see it. And I say not for all them Chelsea fans yesterday, not a Chelsea fan but PSG who felt crushed when Chelsea took them 3 Nils and won the league. Of course President Trump was on hand in the U.S. i don't know if you saw the game, Mr. Browngan passed on medals and so forth. I was like, well, what the president doing in the league, this Gold cup thing, you know what I'm saying? But I guess he's trying to promote World Cup.
[00:01:08] Speaker A: That is very straightforward. World cup is next year.
[00:01:11] Speaker B: World cup is next year as the.
[00:01:12] Speaker A: Majority of the games. And I think Infantino is trying to make certain that he keeps Mr. Trump onside.
[00:01:19] Speaker B: Exactly. So that everybody was in a state of bewilderment in the bars yesterday watching that game. So Mr. Brown, as we get into our conversation this morning, job cuts in the government and the fact that they have removed property taxes. You know your thoughts on these job losses so far?
[00:01:36] Speaker A: Well, you know, when a new administration comes in, you have some of these changes politically with some of these political programs, political stroke, economic programs, because there's always some degree of excess.
Now I don't know whether you needed to go root and branch and change out everyone to be able to do that.
So we'll see how this operates and whether this is a feature, an ongoing feature, or if it's just simply complaining about the last party stacking the decks with its supporters. So now it's my turn to do the same. According to the Nigerians, the Kenyan saying, it's my turn to.
It's our turn to eat.
So that's the first point. That's what it looks like because a lot of these appear to be politically motivated.
So that's the first point. I'm not saying any programs don't need consolidation. I'm not saying any programs don't need a revamp.
But this is more than just a revamp.
So that's point one, point two with the wider issues.
There are going to be a new administration in this fiscal position. If it's serious about moving forward in the future, is going to have to address some difficult situations.
I don't know if this has been ruled out as part of a plan or organization. It doesn't appear so. It simply appears in the short run to be a new organization or one political party just MP making certain it clears the decks for its own supporters. That's what it looks like at this stage.
And there's been no plan or articulated or vision which says this is what we are doing to go onto a wider stage.
So that's point two and the third point that follows from that which is a mix up yesterday.
Well, the bottom line, once you repeal the act, you repeal the nexus between the funding of the local government bodies and the collection of property tax.
So I think there was a any rush to achieve the political victory and to satisfy what one would call a political constituency that was anti property tax.
A mistake was made and it's expensive in the sense that according to what I read in the papers yesterday, they need approximately $516 million more to fund certain types of programs. But it was not considered an immediate budget review.
So this would have been an oversight or mistake and that the difficulties. Well, now that you want to get on with certain what one would call urgent repairs and or whatever maintenance book, you don't have the funds to be able to do it. So that's a situation that will have to be sorted out to the Ministry of Finance.
They don't have much time, 90 days.
And I think if I'm not mistaken, there already has been one round of borrowing. So this would appear to be need to be sorted out by another round.
So we'll see how it works.
[00:04:55] Speaker B: The thing about it is, as the government, you know, moved away from this property tax situation, I was about to ask you what are your thoughts and ideas as to what government can do to generate revenue in the immediate future? Given the fact that over 500 million is now needed to be added to the 3.14 billion allocation, bringing our deficit to 9point something billion. Now how are we going to what sort of initiative can the ministry, you have worked in that ministry, what can they take in terms of shifting around to get this much needed 500 plus million?
[00:05:30] Speaker A: Well, maybe the answer is that you have to borrow it.
There's no way that you governments don't generate revenue. You know, governments tax the private sector generates revenue and governments tax the revenue private sectors generate. So when there is a revenue shortfall or deficit in this fashion, it means that government's capacity, the economy's capacity to absorb on the basis of the current level of taxation has failed and will fail continuously because the economy is not performing at the level that it needs to perform at for the government to generate the type of income they need on the basis of the current expenditure profile to continue.
Now we have to recognize that in the last 25 years of our history, we've run deficits 22 times, which means that the revenue, even when the economy was growing, and remember we went through a boom between 1999-20, roughly 2011, 2009, and then we ran another boom from 2011 to 2014.
So you're talking about 12 years of those 23 years in which we had a boom.
And what was happening is that the government, UNC and PNM were playing catch up in terms of the development program. So we were spending a lot more money in terms of capital projects and our recovery, also running deficits on the recurrent side.
So and then we ran into a problem in 2014 when energy prices declined substantially and we continue to run at the same level of expenditure on the recurrence side. The BM attempted to cut it, bring it back to about, and then find themselves eventually spending more and more as the demands grow.
Now the demands on the recurrent side will always be greater than your capacity to spend. And what you have to do is put some sort of programmatic sets of priorities about what you're going to have happen.
It's going to happen to the UNC in very, in the same way that it happened to the PNM for the same reasons.
If you don't have a vision and you don't settle what your clear goals are and explain to the population what your problem is, then you're going to repeat the mistakes of the past.
The reality is that the economy has not performed and will not perform at the level precisely because the energy sector production levels of natural gas have fallen. That has been our engine.
And that the taxes that come from that particular area are declined. And that has generated a whole number of issues. That's one of the reasons for the foreign exchange shortage, that's one of the reasons for the funding gaps. And the, what we call the non energy sector has not grown fast enough to pick up the difference.
So you're stuck. Unless you can grow the economy, you don't have any real way of generating More revenue unless you increase taxation. Now, that's the difficulty in which any government, UNC or PNM would find itself.
So to cherry pick and say, we're going to go after the property tax and we're going to cut it. Well, you did that. The net result is the revenue is available to you. Well, you can't use it now.
[00:08:58] Speaker B: The property tax.
My apologies. The property tax.
I want to be. Get your thoughts as a, as the former minister in the ministry, how important was that or is that to a nation as it relates to persons paying? Because years ago I had one of my family members telling me about their property and what they would have paid for it years ago. And now they found it very difficult that under the past administration, the property tax went up what they had to pay. So I asked her, your property was valued at 1.6 million 10 years, 15 years ago. Now it's valued at close to 8 million.
Do you want somebody to pay you 1.6 for it when it was valued at 15 years ago, or do you want the 8.5 million for it today?
So I want you to explain very briefly, as best as you can summarize, the pros and cons to property tax. One administration wanted to install it, did install it, in fact, and this administration removed it. So what are the pros and cons? What can we expect with the removal of this tax?
[00:10:05] Speaker A: Well, let's put it this way. Property tax and the implementation of a new property tax to replace land and building taxes is a long journey that started in 1965 and only came to fruition in 2009.
So it takes a long time in Trinidad for us to put taxes on the roads or improve it. Why? Because, quite frankly, governments are populist and they don't like to introduce new taxes on a nation. The only thing that we really did as part of the reform program was actually reduce taxes.
You remember, VAT was introduced. The only new rail new tax that we have was VAT, which was introduced in 1988.
[00:10:49] Speaker B: 87.
[00:10:49] Speaker A: 88. Somewhere there. Box.
And since then we've had a progressive reduction in income tax. The marginal rate of income tax was 75% in 1984. 1985, and we moved it down to 25% and Mr. Inward moved it up to 25 on those who were earning more than. Sorry, 30 to those who are earning more than a million, and then I think 35% again.
So we had a huge reduction in personal taxation as the economy expanded and as government revenue expanded.
So property tax has always been A hole, which was something that we needed to fix.
And to put it in blunt terms, in 2008 government collected about $71 million and the local government authorities collected about 70 million. So it's a total of $140 million we collected in terms of land and building taxes and the total garbage collection cost in 2025 across the country. I'm not talking about everything else in terms of municipal services.
The cost of garbage collection, cost of one item garbage collection was $250 million. So you had $110 million deficit to start.
And there'd been a number of attempts or improvements to change the property tax in different areas starting in point 4 10. So we ended up in a situation where the tax in Point Forte and San Fernando, for example, were much higher than the level property taxes. The way we calculated it was much higher. We had done that as an experiment and the idea being if we were able to do it successfully in areas, then we would do it across the country. So property tax was not something that came willy nilly and somebody just decided to impose it to basically make up for the shortfall in revenue they were getting. It wasn't. The answer is that we wanted to move to a modern system. Why is it important?
Well, because property, there's a city registration of lands and certification and everything else that goes with that, there's a land registry, those things have to be funded. And then in addition to which, local government also provides a number of services which were coming out of central government amount revenue. And the idea was to match it or touch it from property tax back to the local government so that it would be less of a drain on the other revenues. Now that means you have to calibrate the taxes and what is not known to most people. Land and billing taxes by definition meant that the energy sector companies would be under taxed. It was never meant to only hurt or to hurt the population.
It was meant so that it would be a more even distribution of income that flowed from property, including property which belonged to or was used in the energy sector and business generally.
Because the basis of property taxation was inequitable for the general population.
It was sold, unfortunately from a political perspective, as though this was meant to tax Tom, Dick and Harry. Quite the opposite. It was meant to tax those who were not paying a fair share. But I don't think that the message was properly delivered and as such the opposition was able to make inroads and from a propaganda point of view to essentially to argue that the taxation was unfair and simply targeted individuals it was not.
But it was based on the fact that everybody had to pay tax, every property owner, wherever they were.
Right. So I don't. I am one of those proponents that will say to you that I am for property tax. And I will say that I am one of those. I paid my property tax and then I argued in question.
I didn't, I didn't want you to go send in a notice of objection. I pay the tax.
I think that it would have sorted itself out.
We needed to improve our administrative structures as we do in everything in Trinidad and Tobago. But I am one of those who believe that we should be paying property tax as part of our contribution. And as you pointed out, it's a very simple matter if your property is improved in value.
Well, that improvement in value has also come about as a result of some of the changes that have taken place in economy for which government is responsible.
And in those circumstances, if you have improved and the government has done a good job in improving the situation and your property values have gone up, and by the way, expenses go up for government too. They don't remain the same thing. Lest we forget, public servants once again increases. And if I'm not mistaken, that's one of the political cards that is yet to be played.
The PSC has argued that their increases should be not 4%, not 5%, should be 10.
Right. Well, who's going to pay for it? Where's your revenue going to come from? The consolidated fund and income generation? The government is not a. There's no, there's no, what you call it, golden set of gold in the treasury. You could just go and pick up and say, somebody wants some more, so get them some more. You collect it from taxes. And that's the point I'd make all the time. If you were going to increase your expenditure, then by definition your taxation is going to increase.
Now that's the horse that this government and any government is going to have to ride if you don't manage your expenses.
[00:16:20] Speaker B: That's where we are when it comes to diversification. We have beat the energy sector like a horse, like a big snake as it is. We beat it, we brought it. It's almost grinding to a halt.
How sustainable is it for us now to focus our economic structure around the energy sector versus the green economy and the orange economy and so forth? Is it as time really reached where while we are focusing on the energy sector, we need to diversify other sectors in which we can generate income and at least get eyeballs which can generate business? B2B's Fortune and Tobago and put us in a tourism spot.
[00:17:04] Speaker A: If I could give you a quick little example, your family's gotten bigger and you're living in the same house. Your house is too small for everybody. You have two choices. You can buy another house, right? Or alternately, you have to rebuild your own.
Most times you won't have the income to buy another home. So you have to rebuild. Now that means you have to put on extension. Extension is messy because you're living in the house, right? So everybody have to go through a period of discomfort.
Well, that's what diversification means. Everybody has to go through a period of discomfort once you do this rebuilding. And it doesn't come overnight, it takes time.
Let's just look at exactly where we have come from.
We changed our basis of operation under the NER government. And as much as people complain about ner, NER government implemented PNM policies which the PNM was too afraid to do.
And they opened up the economy. They moved away from industrialization by invitation and they moved away from operating behind a negative tax window. We joined the new world economy. We opened our borders, open trade and people had to compete as a result. There are a number of businesses which were started during the period of our independence movement. Negative listing which grew into multi into international companies. They're not multinational companies yet.
So I could point out, for example, SN Jeleel, you could point to Bermuda's Biscuit. You could point Associated Brands. Associated brands started in 1974 in the height of the negative listing period.
But 11 years later, they had to make some serious changes and started to export. Now they are. If you want an international company, they're exporting literally all over the world. They export to North America, they export to Latin America, they export to the Caribbean. Whereas before in the 1986 short 1992 period were largely exporting to the Caribbean, now they export into the world right now. How long? That process didn't take place in five years, it didn't take place in 10.
Right. It's a good 50 years of auction we are talking about.
Right. And some of the new groups answer. Macal and Massey Group are also looking to do the same sort of exploratory adventures abroad.
Why? Because the domestic market is so small. You can't grow in a country of 1.5 million. You can't grow here. Now, that takes time.
Right now, in the meantime, what you have to do is to transition.
You have to change your focus, you have to change your incentives. But at the same token, that's where the point I said about the discomfort. We're all living in the same house and we're trying to expand the house so there will be periods of time where can everybody can't get what they want. Right. It's going to. Somebody will have to make some sacrifices. That's where Trinidad is and that's what has to happen for that sort of reinvigoration and that sort of development of the energy of the non energy sectors to take place.
But it's going to take time.
[00:20:12] Speaker B: With that being said, when you look at the CPAP situation at present. All right, two things come to. Well, two things on the agenda very quickly as we head to the news. One, why, why didn't the price administration seek to deal with the commercial entities when it comes to property taxes as opposed to hitting the other, you know, you at your home on already burdened society. Why not go after the bigger ones and then transition down? All right, if you want to maintain equilibrium. And two, could the government of the day have done something differently as opposed to sending, putting these persons potentially on the breadline even though they're giving them one month salary? I am of the view, just like yourself, that there is casualties of war and if you're, if you're painting a room that you're already living in, it's more difficult than if you move all the furniture out and paint the room. So I understand that. So could government have done something differently to deal with this CPEP situation and these contractors and regularize and streamline things?
And as opposed to the property taxes, why not the bigger heads, the ones that you say wasn't paying their fair share, why not go to them first and transition down?
Your final thoughts on this?
[00:21:21] Speaker A: Well, I agree with you. I think that it was, I think it was a strategic mistake by Mr. Imbert and which only unfortunately only added to the difficulty.
And his argument would be that the businesses were under stress and if he increased the level of taxes that you probably would have could have sparked a level of unemployment which he was not prepared to tolerate right now from my perspective, the answer is that sounds like what you needed to do was reduce the rate of tax, not say that and implement it across the board. That's what I would have done, but chose to do it differently. I think it was a mistake. I think the evidence is clear that it was. But that was his choice, so he has to. And politically they paid a price for it. Now, on the other side of the fence, you know, one of the things that has to happen is that government has to recognize that industrial law, industrial Relations law applies equally to the government as it does to the private sector.
[00:22:26] Speaker B: Wow.
[00:22:26] Speaker A: Unfortunately, government operates on the principle that everybody else is affected. They have to do it and we don't. Right now. That's the problem. And I think that they have to wake up to that reality. If you do it in line with the legislation and there's some evidence, and there's evidence of equity and fairness in what you're doing, then you'll lack much. You will get pushback, but you're likely to get much less pushback than if you're to do it that way. For example, in the Jawaharlal Rambaran case, everybody makes a point that Jawaharla Rambaran took on the government and be the government.
No, Jawaharlal won his case on the basis of Industrial Relations law. And the industrial Relations law is also enshrined in the elements of the constitution. If I have a contract with you and you think that I have broken it unfairly or that I am guilty and I should be dismissed, you have a right to dismiss me. But there's also a process and the judgment was very clear. Jawaharambaran had no right to disclose people's private information in the public domain. The government was right to fire him.
But the government was wrong not to follow the industrial relation process for due course.
And what they did is they gave Mr. Jarala Rambaran the balance of his contract employment the same way they'll have to give Mr. Hillier and the same way they will have to give the man at Wasa for the same reasons. Right. Government has to follow the process just like everybody else.
[00:23:58] Speaker B: You know, I want to thank you very much for this discourse.
We will have a part two to this conversation because it's, it is hardly likely somebody would come out and say, listen, government has to follow due process the same way. It will seem as though it's a biased, one sided thing. And this law applies to us and to them, hey, them is the government. They make the decision this happened. But Jamala Ramburan is a clear example of when you abused the process and didn't handle it properly.
So Mr. Brown, I want to thank you very much.
I wanted to end the interview on a note where we didn't feel too rushed, you know, and really get to understand some of the sciences and nuances taking place with government and these CPEP contractors. Now, your final, final thought in terms of governments, your thoughts as how government, government did promise to re employ these 10,500. Remember, each of these individuals was under a contractor. So if the contractor earned 32 of them and they're no longer back on the system, how are you going to how was the government supposed to re employ that 10,500?
[00:25:09] Speaker A: Point them in the direction of the other contractors. But we're going to see how that one will work out. You can say anything. It is what you do that matters.
[00:25:16] Speaker B: Mr. Barong, thank you so much for chatting with me this morning and for your patience as we sorted our technical issues. And we will chat again in the not too distant future. Have yourself a blessed and safe day, sir.
[00:25:25] Speaker A: Thank you very much.
[00:25:26] Speaker B: All right. Thank you.
[00:25:26] Speaker A: The best insight, Instant feedback, Accountability. The all new Talk Radio Freedom 106.5.
