Despite government revenue being up 15 percent in the first nine months of fiscal year 2018/2019, the government would have to collect over $960 million from April through June this year to meet the revenue projection laid out in its 2018/2019 annual budget, an analysis of the data revealed in the “Nine Months Consolidated Fiscal Snapshot and Report on Budgetary Performance”, which was compiled and released by the Ministry of Finance yesterday.
At the end of the third quarter, the government had only collected 63.7 percent of its budgeted revenue for the fiscal year.
The outstanding amount is a significant one given that the Minnis administration was only able to collect $600 million in revenue in the third quarter.
The government has projected it will collect $2.6 billion in revenue for 2018/2019.
Notably, at the end of March, collections from value-added tax (VAT) were only 55.6 percent of the budgeted amount for the year, with $470 million of the projected VAT revenue still outstanding.
In its snapshot, the Ministry of Finance highlighted accommodations to hotels, resorts and development projects as a reason for the shortfall in VAT collections.
“Collections represented approximately 55.6 percent of the budget, with the initial quarter’s performance moderated by the government’s accommodation to hotels and resorts and development projects, to honor business booked/secured, prior to September 30, 2018, at the old rate,” the report said.
However, stamp tax collections on financial and real estate transactions exceeded budget projections by the end of the third quarter, with the government having collected $161.6 million compared to the projected amount for the year of $143.7 million.
“The transition from VAT on realty to stamp tax on realty led to an approximate two-fold increase in the yield from $80.6 million a year ago to $161.6 million in this fiscal period,” the report said.
The report also highlighted the impact of delays in collecting taxes on gaming houses.
“Gaming tax receipts, at $22.5 million, were $5.1 million below the corresponding period and exclude the impact of the recent agreement reached with the gaming houses that will recoup a portion of the new fees anticipated in the first half of the year,” it said.
“Consequently, collections to date amounted to only 32.1 percent of the $70.0 million budget target.
“General stamp taxes were higher by $4.5 million at $7.2 million.
“However, this remained at a tempered 25.6 percent of the budget, due to the delayed introduction of the new five percent stamp tax on gaming patrons and the associated estimated revenue loss of $10 million.”
As of March 2019, the deficit stood at $129.2 million, compared to $174.2 million at the end of December 2018.
The GFS deficit for 2018/2019 is projected at $237 million.
According to the report, expenditure was over $1.8 billion, 63 percent of the projected total for the year, at the end of March.
The amount represented an increase of five percent compared to the same time last year.
The government attributed the increase to growth in recurrent expenditure, as well as “increases associated with seasonal expenditures and other operating costs”.
“Spending increased during the review period for several activities, including subsidies for non-profits and households, and social assistance benefits, particularly for the National Drug Plan,” it said.
“Spending on the wage bill decreased, partly due to a reduction in payments for overtime and other allowances.
“Transfers to private non-financial enterprises were a lot higher at $27.6 million from $8 million, primarily due to the settlement of arrears with cruise line operators and grant payment to schools during the period.”