Minister of Finance Peter Turnquest gave Legislators a provisional account of how things have shaped up the first half of the current fiscal year and an outlook of what is to come over the next six months.
In his mid-year budget communication he explained took how revenue was earned and spent and why the government accepts the need to remain focused and resolute in its efforts to strengthen the country’s fiscal position.
According to the Minister, the fiscal deficit is to come in slightly lower than projected by some $5 million to $10 million. The budget deficit then will be somewhere near $230 million.
The Minister noted that in the first six months – July to December – the fiscal deficit contracted by 31 per cent to $175.3 million.
The outturn for revenue showed a $129.5million increase in total receipts to $1billion, 10.3 million.
He said, “we know that historically revenue collections are significantly higher in the second year when several annual payments such as real property tax, business licenses and bank and bank and trust license taxes are collected.
“Nevertheless, with the timing of the VAT payments at the old versus the new rate during the year, as well as the concessions granted to hotels and constructions with respect of previously book reservations and contracts, we now expect total VAT collections in 2018/2019 to be somewhat under the budgeted forecast.”
Revenue outcome will also be impacted by the new agreement between the government and gaming operators.
At the start of the 2018/2019 fiscal year, a six tier tax scale was to apply. The scale ranged from 20 per cent to 50 per cent. This of course depends on the revenue of each gaming house.
There was also a five per cent stamp tax on deposits and any non-online games or digital sales.
However, following fierce pushback from gaming houses, there’s now a new agreement effective January 1 of this year.
“With this new agreement, projected revenues to be collected from the gaming houses will be somewhat below the amounts that had been included in the 2018/19 budget, in the sum of approximately $18 million.
“In the budget we had also projected some $80 million in incremental revenue to be secured by the Revenue Enhancement Unit. As that Unit will now be fully established in the second half of the fiscal year.”
“All told, we now estimate that revenues will fall short of the Budget projection by some 7 per cent but still come in some $400 million higher than the last fiscal year,” the Minister said.
According to the minister, that’s still some $400 million higher than last fiscal year.
On the expenditure side there was a $50.9 million increase in spending – still reportedly below budget.
“Arrears payment contributed to the overall increase in expenditure. As I mentioned before, this administration made the identification, the documentation, and the settlement of the mountain of arrears left by the previous administration one of its chief objectives, and we are doing just that.
“We committed to paying $172 million in this fiscal year and have already paid $65.1 million, or 37.8 per cent of the total budgeted amount,” he said.
He added that, the bulk of the money spent went to clearing up arrears to CTF Holdings Ltd or Baha Mar at $11 million, PHA medical suppliers at $8.2 million, consolidated water at $6 million, Carnival Cruise line at another $6 million and various garbage collection vendors and the University of the West Indies at $5.4 million a piece.
The Minister stressed though that the government is not under the delusion that it has completed the task of righting the fiscal ship, but it accepts that much work needs to be done.
