When I started this examination of the reported taxes paid by the e TecK hotels, it was with faint hopes of making any findings, given the erratic quality of the information provided by Minister Gopee-Scoon. Even the title ‘Anything for a Buck‘ was an attempt to make light of what seemed near impossible, picking sense from nonsense. But the humour soon vanished, just like the Buck, as I estimated the income and salaries for those hotels – Magdalena Grand and Hilton Trinidad.
In last week’s article, I estimated the sales and room revenues of those hotels, which showed that Hilton Trinidad’s Sales Revenue (estimated from its reported payments of Business Levy & Green Fund) was exceeded by its Room Revenue (estimated from its reported payments of Hotel Accommodation Tax). Sales Revenue is usually the sum of room revenue, food & beverage sales and other rentals for meetings/functions. That can only be described as an anomaly and one that requires a proper explanation, since it has a direct and adverse effect on the Rental payable to e TecK by Hilton Trinidad under the terms of its Management Agreement. That Management Agreement was registered as a Lease on 7th July 2006.
Last week I also made the point that there was not enough information to reliably estimate costs, other than salaries, from the taxes paid. This week, I will delve into the implications of the salaries by using the reported payments of NIS contributions and PAYE. Given that Magdalena Grand has no reported PAYE, according to the Minister’s statement on 19th March 2019, it is not possible to compare that hotel with Hilton Trinidad on all bases.
expenses based on taxes
|Salary expense via NIS contribution||A||$28,250,033||$26,857,710||$23,650,378||$26,814,454|
|Chargeable Income via PAYE||B||$24,160,492||$17,962,156||$16,169,536||$30,270,944|
|Total Personal Allowances||C=A-B||$4,089,541||$8,895,554||$7,480,842||-$3,456,489|
|Maximum number of workers earning more than the Personal Allowance||D=C/F||68||124||104||-48|
income averages to
|Each worker’s annual salary
|Each worker’s monthly salary
Notes to Table #1
- Maximum number of workers is the total Personal Allowances divided by individual Personal Allowances.
- 2018 was seemingly anomalous, perhaps due to some balancing payment, so I am not proposing any conclusions from that year.
This analysis discloses a surprisingly high salary level, if one considers the averages. Salaries are deductible in arriving at Average Gross Operating Profit, according to clause B1 in Article V Section 1 of the Lease Operatorship Agreement.
The estimated salaries present even more of a paradox when one compares the two hotels. Consider that Magdalena Grand, which we are told is deeply unprofitable, pays wages which are between 23-31% of total turnover (Sales Revenue) but Hilton Trinidad, which is of course profitable, pays 54-78% of its turnover in wages. Well I tell you.
|ESTIMATED REVENUE & WAGES|
|Salaries cost %age of Sales Revenue||23.0%||25.8%||28.6%||31.6%|
|Salaries cost %age of Sales Revenue||55.0%||58.5%||54.3%||78.3%|
Article VII Section 4 ‘Reports and Consultation’ sets out at C on pg 13 this obligation –
“…Within sixty (60) days after the end of each fiscal year, Hilton shall deliver to e TecK a balance sheet and profit and loss statement certified by an independent public accountant retained by Hilton, showing the results of the operation of the Hotel during the preceding fiscal year, containing a computation of the Adjusted Gross Operating Profit and the Rental payable to e TecK for such period…The cost of the audit shall be charged as an expense to the operation of the Hotel…”
That clause also specifies an option for the parties to engage independent auditors in the event of a dispute in relation to the certified computation of the Adjusted Gross Operating Profit and/or Rental payable.
This is an object lesson in the costs of obscurity, previously hidden now only partially disclosed. For those who like to seek refuge in commercial this and that, please note that the Lease Operatorship Agreement for Hilton Trinidad contains no confidentiality clause. Despite that, our requests for these very details were denied on those obviously spurious grounds. That is where we are.
The Minister must now submit the Hilton Trinidad annual audited accounts from 2004 to 2018 to the Parliament. After all, the public already paid for them, not so? Can we rely on Senator Obika to ask the bigger and more important questions in the national interest? This is how the Buck does pass.
4 thoughts on “Property Matters – Anything for a Buck, part three”
Mr Raymond. Your have brought to light these obscure dealings in the management of the various hotels owned by the people of TT. I have listened to the ignorant citizens and professionals pass negative comments on the Sandals fiasco. These articles show that the all governments must be transperant with the citizens who own these facilities. Wake up people of TT!
As we celebrate Easter, we should ponder on how we pay and pray for bliss, cry for those who suffer-but do little else, fast and then gorge, and most of all complain and add to the problem. The things we have done for a buck cannot be replicated here. We all know what they are. Manipulation is what we teach by our actions and we punish those who learn it from us. Then we pray for their souls. WEB Du Bois The Souls of Black Folk, (1903). Black Shack Alley (1950) by Joseph Zobel of Martinique and even our own Keith Smith, who exasperates because he exposes our persistent indifference to crime and its multi-layered interpretations we juggle as circumstances prescribe. Read anything by Earl Lovelace and deny that his mirrors do not reflect who we really are.
We are the creators and living replicas of the legendary Buck who continue to do anything for a buck.