At the recent launch of the Trinidad and Tobago Extractive Industries Transparency Initiative (TTEITI) Report 2016, perhaps the most anticipated information, apart from whether or not any ‘unexplained discrepancies’ were reported, was the figure for total flows to the Government of Trinidad and Tobago from the reporting companies in the oil and gas sector. And, even with some knowledge and appreciation of the steady decline in commodity prices coupled with low oil and gas production levels, this figure will still come as a surprise to many.
Total flows declined by approximately 58% from TT$ 21,007,592,015 for the fiscal 2015 to
TT$ 8,864,433,516 for fiscal 2016, with the National Gas Company (NGC) being the largest single taxpayer for the third consecutive year, followed by EOG Resources and bpTT.
In this climate of declining commodity prices and low production levels, are companies also reducing their social spend? The table below shows social expenditure reported by companies for the largest contributors, with total social payments declining by 46% from TT$ 125,624,848 for fiscal 2015 to $ 67,880,341 for fiscal 2016.
Given that there has also been a decline in social payments, is there then a positive relationship between the amounts that companies pay in taxes to the government and amounts they pay in social contributions to the NGO sector; is it the case that as companies pay less in taxes, which implies less revenue, they also pay less in social contributions?
It is clear from the chart that BP, Shell, and BHP have all increased their social payments despite their decreased contribution to taxes and other payments. However, the remaining four companies did not respond to lower taxes (and other payments) in the same way.
BP Group, which was the third largest taxpayer for 2016 saw its total payments (tax and other payments) decline by 89% from TT$ 4.5 billion in fiscal 2015, to TT$ 485 million in fiscal 2016. Surprisingly bpTT’s social payment was the largest at TT$ 23 million representing a 28% increase over last year’s payment.
Shell Group (formerly BG Group) also saw their total payments (tax and other payments) decline, from TT$ 1.1 billion in fiscal 2015 to TT$ 385 million in fiscal 2016, a decline of 66%. Similar to BG Group their social payments increased, from just over TT$ 11 million in fiscal 2015 to just over TT$ 13 million in fiscal 2016, an increase of 18%.
Total payments (tax and other payments) for BHP Group also declined, from TT$ 606 million in fiscal 2015 to TT$ 428 million in fiscal 2016, a decline of 29%. Social payments for BHP Group increased marginally from TT$ 1.1 million in fiscal 2015 to TT$ 1.2 million in fiscal 2016, an increase of 4%.
Other companies, for example state owned NGC did not respond in the same manner. NGC has been the largest single taxpayer for three consecutive years, however their total payments (tax and other payments) declined by 32% from just over TT$ 8 billion in fiscal 2015, to just under TT$ 6 billion in fiscal 2016. Social payments however, declined by 78% from approximately TT$ 77 million in fiscal 2015 to approximately TT$ 17 million in fiscal 2016. This was the largest reduction in social payments in 2016 over 2015.
EOG Resources Group which was second only to state-owned NGC as the single largest taxpayer, saw a decline in total payment (tax and other payments) of just 5% from TT$ 1.4 billion in fiscal 2016 to TT$ 1.3 billion in fiscal 2015. Social payments however declined by 26% from TT$ 1.4 million in 2016 to just over TT $ 1 million in fiscal 2016, and EOG Resources reported the smallest social payment of the top eight companies reporting social payments.
What then is the relationship between taxes and other payments made to government (which broadly speaking are based on revenue) and social payments, or are their factors other than revenue that companies use to determine their level of social investment?
It appears to be the case, at least in some instances that companies reduce their social contributions as they pay more in taxes, perhaps being of the view that paying more taxes allows the government to do more in the area of social development, or perhaps believing that paying taxes is the company’s way of fulfilling their responsibility to society.
It might also be the case that some companies are increasing their social payments to channel more resources to society given that they have paid less in taxes.
Whatever the rationale for determining the level of social payments, the reality is that for 2016 in total (based on information for reporting companies) the support for the social and environmental development has almost halved. In addition, according to the Social Sector Investment Plan 2017, government subventions payable to Non-Governmental Organisations decreased from TT$ 153,535,120 in fiscal 2015 to TT$ 140,887,531 in fiscal 2016, a decline of 8%.
From both private and public sector, NGOs in Trinidad and Tobago, while playing a critical role, continues to be faced with decreasing revenues. Within the past few years, like all other organisations, civil society too has had to find new and innovate ways to resource their organisations and remain sustainable as Trinidad and Tobago adjusts their champagne tastes to our new mauby reality.