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Category: Trinidad Economy Date: 07 Jan 96


Ira Mathur wonders whether Brian Kuei Tung can juggle

 

“Hold all calls” said Finance Minister Brian Kuei Tung to his secretary. Imagine him, head down, a semicircle of paper on his desk, UNC manifesto, public service bills, notes from the Chamber of Commerce, unanswered messages, a pot of hot coffee to take him through the days and nights. He has a budget to present.

 

We can only speculate on what it will hold, because like the Chamber President, Mr. Michael Arneaud, who has not heard from him at all, we have not been able to break his concentration. So we try and get pieces of the jigsaw together. The Finance Minister has been largely left to his own devices (The Prime Minister is determined not to interfere in Ministerial portfolios) but he does have some loose directives from his boss. One, that he tackles poverty, two, that he “rake and scrape” a budget that will put cash in the hands of public servants, three, that the budget gives “an indication that we intend to implement the promises we made in the manifesto.”

 

And then he’s had the missives from the Chambers of Commerce: “remove motor vehicle license fees”; “drop corporate taxes to 30 percent”; “create jobs”. Public Administration Minister Wade Mark gives another clue. He says the budget will be “prudent and controlled.” There will be no flight of capital or inflation or fluctuating exchange rate. No wonder the Finance Minister is incommunicado. Can he take the pressures and balance opposing forces? Can he deliver to everyone’s satisfaction?

 

A bio-study of him may give us more clues. Brian Anthony Kuei Tung was born on March 23, 1946 in Frederick Street. His parents separated when he was 12, and he was left with his father who struggled to support him, and gave up, leaving young Kuei Tung to bring himself up. After attending Park Street Boys RC (now Rosary Boys) he went on to St. Mary’s College on scholarship where he took his higher certificate in languages.

 

Young Kuei Tung then joined Pannel Fitzpatrick as an apprentice where he studied accountancy for four years. After he qualified as a certified accountant, he joined IBM and was sent to Guyana to set up a new IBM branch there. In 1974 he left IBM to take up a position at Maritime Insurance Company Limited. It was here that he met Mervyn De Souza who introduced him to the PNM, and Steve Ferguson. Nine years later, in 1983 he accepted the post of deputy managing director of American Life General Insurance Company (ALGICO). Within the year he was appointed managing director.

 

Kuei Tung resigned from ALGICO in 1991. In December that year he was appointed Minister of Trade, Industry and Tourism by the new PNM government. He resigned from his Cabinet position in December 1993: Manning dropped him from the finance and general purposes committee and speculation surrounding a Cabinet reshuffle that would split his Ministry into three separate portfolios. He left on January 31, 1994 but like his successor Wendell Mottley, quietly, without apparent rancour. Between then and his appointment as Finance Minister under the UNC government, he went into business with Ishwar Galbaransingh, setting up BRI Holdings to purchase of West Indies Drive Inns - the company that started the first fastfood chain in Trinidad & Tobago, Royal Castle - from the Montrichards.

 

What can we deduce?. As a student, and accountant, Kuei Tung’s rise seemed meteoric. He obviously knows the value of turning a dollar as his business successes indicate. He is independent - he has studied and succeeded on his own with few props, from the age of 12. He is bright - he went to St. Mary’s College on scholarship, and was given high positions in the companies he joined. He is a hard worker but you wouldn’t want to cross him. He is strong willed - unafraid to resign over a dispute. He is loyal - stood by a party which sidelined him and by friends who suffered the same fate. He is tough enough to take on the after budget flak, independent enough to hold his own, and bright enough to understand the political and social issues at stake. And he does not take calls from the hallowed Chamber of Commerce on the eve of a budget. He has his priorities right. But after interviewing representatives from academia, business, politics who held divergent points of view on what he should do, one burning question remains: can he juggle?

 

POVERTY

 

Frank Rampersad, economist, former Permanent Secretary in the Ministry of Finance:

Poverty can be tackled in four ways:

  1. Social security benefits systems benefits should be adjusted to cope with inflation.

  2. Attention should be paid to the growing phenomenon of the single female parent. Policies should be devised to enable parents to cope to prevent young people from committing anti-social acts.

  3. Malnutrition should be controlled through properly structured school feeding programmes which are tied to domestic agriculture.

  4. The budget must give serious consideration to a modified unemployment insurance scheme, that is contributory, and short term, based on the number of weeks the applicant has worked. The scheme should be one which the society can afford and will take the sharp edge off poverty.

 

Ken Valley, Opposition parliamentarian, former Minister of Trade and Industry:

Of course I believe he should consider poverty. In the early years we had to get the economy moving, and so could not concentrate on social policies. Only after enlarging the cake could we begin to think of distribution.

 

Wade Mark, Minister of Information and Public Administration:

We cannot consume without producing. Public servants have to work hard, expand the national cake. Out of a budget of $10 billion, $6 billion is allocated to public, foreign debt and expenditure on salaries. That leaves us four billion for national development, for the street children, the unemployed., the homeless....We can’t just leave them. We need funds to address crime, drugs, poverty, high prices.

 

Michael Arneaud, President, Trinidad & Tobago Chamber of Industry and Commerce

We recommend that VAT is removed on cheddar cheese, sardines, corn beef, cooking oil, salt, tuna, mackerel, saltfish, sugar, butter, bread and sausages to help less fortunate people in society: There are no free lunches but this should help them. The Finance Minister could also allocate funds for organisations that deal with poverty on a daily basis.

 

TAXATION

 

Frank Rampersad

The Finance Minister should increase Corporate and personal taxes because indirect taxes such as VAT hurt the poor . Pressure groups are saying cut direct taxes on goods such as imported cars. These are goods which only the better off people afford. The last government and one before it cut direct taxes but increased indirect taxes (VAT).

 

Michael Arneaud

I have no problem with VAT I think VAT is a fair and equitable system. VAT is one way that people who spend have to pay. We’re hoping as a business community to see a tax break so we will have more funds to reinvest. We’re hoping the Finance Minister will cut corporate tax to 30 percent. We didn’t get a square deal with the last government which started at 35 percent, took it up to 45 percent and brought it back down to 38 percent.

The government can get tax revenue from massive petrochemical projects in return for concessions to investors.

 

Ken Valley

I would like a reduction of taxes both at corporate and personal level to a maximum (corporate tax rate of 35 percent).

 

SAVINGS

 

Frank Rampersad

The Finance Minister has to recognise that the national savings ratio has to increase and this means they have to generate a fiscal surplus. (The National savings ratio is determined by personal savings and any government surplus. It is now about 15 percent and needs to go up to about 25 percent because the money will then be available for investment in pressing needs in the country such as schools, health, housing, social services. Without savings, interest rates are pushed up.)

This budget must keep purchasing power particularly among better off sections of population on a tight reign. This can be inflationary and puts pressure on foreign exchange.

 

Ken Valley

I would like to see a budget with a surplus at least equal to 1995 (0.4 percent) overall surplus. I would like to see a continuation of economic policies of PNM.

 

OVERVIEW

 

Michael Arneaud

Large corporate groups should be allowed to offset losses in one company against profits in another. In the Supermarket industry we feel the business levy should be reduced to a quarter of a percent because at its rate of .5 percent equates to tax rate that is higher than the present tax rate of 38 percent.

I think the minister should concentrate on improving the government’s tax position by computerizing, modernizing the tax system so everybody pays and not some.

We were happy with the previous government’s budgets. Under the last government we got messages from Minister of Finance every week. This Minister has be busy so we haven’t heard from him. I hope this government will build on the policies of the previous government.

 

Ken Valley

The PNM left the treasury in better state than when we got it.  We met the treasury with an overdraft of 1.9 billion dollars and left it with surplus of 433 million. Debt servicing has also been coming down. We moved from a defect to a 2.3 billion turnaround. Our policies have led to growth and I hope the Finance Minister continues them.

 

Frank Rampersad:

The finance minister has to be careful not to tamper with the exchange rate. Since the floating of the dollar our economic stability has been measured by the stability of the exchange rate. This has been stable since the dollar was first floated in 1993 ($6TT to $1US). A sudden drop will halt investment and start capital flight causing a vicious circle by putting further pressure on the exchange rate. With liberalization he has to use the two tools available to control the exchange rate: the investment/ interest rate policy (which keeps interest rates high and makes Trinidad a good place to deposit money in) and the fiscal surplus (keeps a lid on public and government spending ensuring money is available for businesses to borrow to expand and create jobs).

 

Wade Mark

I want to state categorically that whatever efforts are made by the government to meet commitments to public servants will not destabilize the national economy, impact negatively on exchange rate or trigger a spiral in inflation. Anything we do will be prudent and controlled. We have a commitment and are keeping it but are also constrained by the financial reality.

 

PUBLIC SERVICE DEBT

 

Wade Mark

There are 14 public sectors groups, 10 of which have signed an agreement to take arrears in bonds. We have said that some payment will be made in cash. This will be manifested in some sense in 1996, but not at the expense of the economy. We have already agreed to pay PSA, first and second division prisons officers their correct salaries which should amount to 130-150 million dollars.

We have to ensure equity in the system. One group cannot be too far ahead of others. We have raked and scraped to satisfy the public servants.

We are sure that the men and women in the trade union movement are rational and seek the nation’s interest. A trade union will never be happy until all demands are met. We hope they understand the fiscal constraints we are saddled with.

 

Frank Rampersad

There is no question that the Finance Minister can(not) pay public service debt, except through bonds. Paying cash will increase money supply and destabalise the exchange rate. If he does, the country will suffer the fate of Jamaica and Venezuela which have sliding exchange rates.

 

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All Articles Copyright Ira Mathur