Obika: Budget heavy in rhyme but hollow economically

Taharqa Obika -

Economist and former senator Taharqa Obika has described the first budget of the United National Congress (UNC) administration, as “heavy in rhyme but hollow in economic reason.”

Obika, who previously served as a UNC senator before crossing the floor to the People’s National Movement (PNM), delivered a sharp critique of the $59.2 billion national budget presented by Finance Minister Davendranath Tancoo in the Parliament on October 13. He said Tancoo's maiden budget presentation may have been delivered with energy and eloquence, but lacked the economic depth and direction required to guide the country’s recovery.

“The minister read with such energy that he lost his voice as he recited poetry from Khalil Gibran and even the UNC’s campaign slogan about winning. But though heavy in rhyme, it was regrettably hollow in economic reason,” he said in a WhatsApp message to the Newsday.

He argued that the government’s first fiscal plan should have laid a firm foundation for the next five years, giving clear signals to domestic businesses, investors, and international partners about the country’s economic path.

Instead, he said, it left “gaping holes” in key areas such as revenue collection, pension reform, and taxation policy. Obika, who holds an MBA in Finance and a BSc in Economics, said the budget failed to identify concrete strategies for generating the revenue required to meet the government’s expenditure targets.

“The budget statement listed a few administrative measures such as hiring additional customs staff and changes at the Board of Inland Revenue (BIR), however, there was no mention of how much revenue these actions are expected to generate. If it is not measured, it cannot be managed.”

He warned that the absence of detail on the revenue side could signal that “the government is out of its depth” in balancing the books without resorting to devaluation of the TT dollar.

“No amount of poetic flourishes can distract from the fact that this administration has not delineated how it will raise revenue.”

Obika also criticised the proposal to replace the Value Added Tax (VAT) system with a sales tax, calling it “a mere statement rather than a well-developed policy intervention.”

VAT accounts for more than ten per cent of government spending and is deeply embedded in the country’s fiscal framework, he said.

“Tampering with this system without first developing and communicating a suitable replacement is fiscally reckless,” he cautioned.

“It is abhorrent that such a major shift to our national revenue architecture could be announced without a robust implementation plan, impact assessment, or national consultation. He said credibility remains the “true currency in politics and governance.”

Obika also criticised government's decision to revise the National Insurance System (NIS) pension age from 60 to 65 phased in between 2028 and 2036.

He said the change will affect more than 440,000 contributors and “comes as a shock” to workers who were expecting to retire at 60. “It begs the question – what happens to someone forced to retire at 60 but who must wait another five years before accessing full NIS pension?”

He said the measure will force many to turn to private pension and insurance plans to bridge the gap – at a time when the budget also increased taxes on the insurance sector. “This cost will inevitably be passed on to citizens. By this singular measure, the government has placed significant strain on the majority of the labour force.”

Obika also criticised the new landlord tax, predicting an inevitable rise in rents by at least 3.6 per cent as property owners adjust to maintain their income.

“For instance, a landlord charging $3,000 would now have to charge about $3,109 to offset the tax,” he explained.

In delivering his $59.2 billion 2025-2026 fiscal package in the Parliament, Tancoo said said landlords and business owners not registered with the BIR, would pay a one-time registration fee of $2,500, effective January 1, 2026. He said this is expected to yield $70 million .

Obika said landlords would simply recalculate their rent to maintain income levels. “For example, if a landlord’s current rent is $3,000, dividing by 0.965 means the new rent would be $3,109.33 to offset the 3.5 per cent surcharge,” he said.

Obika said the budget “should inspire confidence and guide investment, but this one reads more like a poem than a plan.”

Obika argued that the UNC government’s first budget missed an opportunity to chart a coherent economic path. “A budget should inspire confidence and guide investment. This one, unfortunately, reads more like a poem than a plan.”