Trinidad and Tobago - Politics, government, and taxation

Trinidad and Tobago is a parliamentary democracy, with a president elected for a 5-year term by members of Parliament. A prime minister, usually the leader of the majority party, is appointed from among the members of Parliament after elections, which happen every 5 years. The bicameral (2-house) Parliament consists of a 31-seat Senate appointed by the president and a 36-seat House of Representatives elected by popular vote. The Supreme Court consists of a High Court of Justice and a Court of Appeals, to which judges are appointed by the president after consultation with the prime minister.

Politics in Trinidad and Tobago has tended to be organized along ethnic lines since self-government began in the 1950s. After independence from the United Kingdom in 1962, the dominant political party was the People's National Movement (PNM), led by the influential Dr. Eric Williams, until his death in 1981. The PNM remained in power throughout the following period until 1986, when an opposition alliance won elections. Although not explicitly racialist in outlook, the PNM attracted African-descended supporters and concentrated on the urban electorate with promises of jobs and welfare programs. The PNM returned to power in 1992, but in 1995, a party dominated by East Indians, the United National Congress (UNC), led by Basdeo Panday, took power with a prime minister descended from that ethnic group for the first time. The UNC won elections again in December 2000 but amidst considerable controversy over alleged irregularities.

Despite marked differences in ethnic composition and allegations of racial bias, the 2 main parties are not radically different in terms of ideas and policies. The PNM was initially in favor of strong state intervention and ownership during the 1960s and 1970s, but the recession of the 1980s forced the government to accept advice from the International Monetary Fund (IMF). This advice included reducing import tariffs , abolishing foreign-exchange controls and generally opening up the economy to foreign investors. The UNC government has maintained these policies, encouraging foreign investment in key areas of oil and gas extraction.

Governments in Trinidad and Tobago have a strong impact on economic development, largely because the state retains a controlling interest in the management of the country's natural resources. There are state-owned corporations in oil, gas, steel, and telecommunications. The government also influences the economy to a great extent by its relationship with foreign companies, from which it derives significant income in the form of taxation and royalties on oil and gas exports. Organizations such as the World Bank are critical of Trinidad and Tobago's large state sector, claiming that it is over-staffed, bureaucratic, and obstructive to real competition in the energy industries.

Tax revenues in Trinidad and Tobago come from a variety of sources. The oil industry accounted for about 20 percent of tax revenues in 1998, while income tax provided 30 percent, and sales and service taxes about 20 percent. A value-added tax (VAT) was introduced in 1990 at the suggestion of the IMF when oil revenues had fallen significantly.

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