Revenue jump: Gov't eyes increase in tax haul
Recurrent tax revenues are projected to jump by$24.2 billion in the next fiscal year, with the Government indicating it will be seeking to collect $402 billion in taxation to fund its $641.6 billion expenditure package, which was tabled in the House of Representatives yesterday.
The expenditure estimate reflects a $102 billion increase in the national Budget, making it the first time since the 2012-2013 fiscal year that the Budget is jumping beyond the $600 billion mark. The budget that year was $602.5 billion.
Last April, Parliament approved a $540 billion Budget, which was later reduced to $539.3 billion.
The Government collected $261.2 billion at the end of December 2014. It is projected that $377.8 billion in tax revenue is to be collected by the end of the fiscal year which ends on March 31, which is way above the $339.7 billion collected in the 2013-2014 financial year.
Revenue and grants forecast for the 2015-2016 year amount to $458.1 billion or 27 per cent of GDP, compared to the estimate of 26.5 per cent of GDP this year. The forecast for the 2015-2016 year represents a 9.6 per cent increase over the 2014-15 estimates. The Ministry of Finance said the increase is above the average annual increase of seven per cent over the last five years.
Based on data published by the Ministry of Finance, tax revenues were running $9.7 billion behind projections at the end of December. The Government had budgeted to collect $268.3 billion to year-end but had only collected $258.6 billion.
General Consumption Tax (GCT) was $5.4 billion behind the projected collection of $ 50.9 billion and tax on income and profits was underperforming by $3.3 billion.
Meanwhile, the finance ministry says wages and salaries have constituted an average of 52 per cent of Central Government's primary expenditure over the last five years. Under the extended fund facility with the International Monetary Fund, Jamaica must reduce its wage bill to nine per cent of GDP by March 2017. The wages-to-GDP ratio is currently estimated at 10.1 per cent.
However, with public-sector wage freeze coming to an end on March 31, 2015, the Ministry of Finance has said the outcome of negotiations is uncertain, "thereby introducing an element of risk to the wage bill and the wider fiscal programme".
"To help mitigate this risk, the GOJ (Government of Jamaica) has included a contingency provision for wage adjustments in the FY (fiscal year) 2015-2016 Budget. The challenge, however, will be to amicably conclude settlements to, as best as possible, fit within the contingency allocation," the ministry said.
The amount set aside in contingency is $21.3 billion, $11.2 billion of which relates to new rates, including backpay for groups which settled outstanding salary claims in the 2014/2015 fiscal year, and the final tranche of one-off payment to public-sector workers.
The other 10 billion reflect provisions for the payment of statutory deduction arrears for ministries, departments and agencies as well as the Jamaica Urban Transit Company; the payment of central government arrears; and GCT provisions for government purchases.