Shadow Minister of Finance Chester Cooper said yesterday that the revelation that nearly one billion dollars in revenue must be collected in the last quarter of the fiscal year in order to meet budget projections indicates a failure on the part of the government.
“The more fiscal snapshots the government releases, the clearer the picture of failed policy and bad administration by this government becomes,” he said in a statement.
“It is astounding to learn that the government is $1 billon away from its annualized revenue target with only three months left in the fiscal year.
“It’s inconceivable that this administration budgeted so poorly.”
The “Nine Months Consolidated Fiscal Snapshot and Report on Budgetary Performance”, which was prepared by the Ministry of Finance and released today, revealed that 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 annual budget.
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 report also noted that 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.
The government raised the VAT rate from 7.5 percent to 12 percent last July in a move that was met with public outrage.
The report said the government’s decision to accommodate hotels, resorts and development projects to honor business booked or secured prior to September 30, 2018 at the old rate was a reason for the underperformance of VAT.
“That value-added tax (VAT) was raised by 60 percent, yet the government is on track to fall short of its forecast collection by hundreds of millions of dollars is a failure of epic proportions, despite the reported growth in the economy,” Cooper said.
“It is a failure that with three quarters of the year passed, only 63 percent of revenue has been collected.
“The minister of finance knows full well that there is no windfall expected in the last few months of the budget year that will get them close to the target amount.
“It is clear, and apparent by their own admission, that this administration botched rollout of the VAT increase and other taxes due to poor modeling, poor implementation, a lack of consultation and politically motivated exemptions.
“Whose fault is it that hotels and others were given a grace period to implement VAT because the government failed to understand many of their commitments were made with the understanding that VAT would not be hiked?”
Cooper also criticized the government’s deficit target and expenditure.
The Fiscal Responsibility Act, which was passed last year, set a target of a deficit of 1.8 percent for the 2018/2019 fiscal year.
“The FNM is disgracefully starving capital expenditure and neglecting infrastructure in order to hit a rigid deficit target that no one in this country asked for,” Cooper said.
He added, “…The continuous harping on the deficit to explain government’s fiscal policies is losing its shine.
“To top it off, recurrent expenditure is still up by $143 million.”
Cooper added, “Now the minister of finance suggests that next year, the budget targets are expected to be met.
“If they were so off with this budget exercise, why on earth would anyone believe they will craft a more realistic budget next year?”
Education: Virginia in Charlottesville, BA in Foreign Affairs and Spanish