Phillips questions if revenue targets 'politically contrived'
Casting doubt on the credibility of the Budget, particularly the forecasted revenue intake, Opposition Spokesman on Finance Dr Peter Phillips is questioning whether the numbers presented were "politically contrived".
Phillips, the former finance minister, argued that government technocrats could not have computed the "unrealistic" projected out-turns.
In his contribution to the Budget Debate in Gordon House yesterday, Phillips said the projected increase of 13.2 per cent, or $18.3 billion, in general consumption tax for the new fiscal year is unlikely to be achieved when placed against the background of a 5.8 per cent inflation target and a rate of real GDP growth of 1.8 per cent for the financial year, "which means the rest is compliance".
Continued Phillips: "We have not seen that level of compliance, not your time, not our time. I dare say given what I know of the officials, I cannot believe that they would give their imprimatur to these estimates. I cannot believe that these estimates of revenue are the results of the work done by the officials, given the quality of work with which I am familiar and which they have demonstrated over the years."
NOT ATTACKING OFFICIALS
In a sotto voce comment, Shaw accused Phillips of attacking government officials.
However, Phillips said: "I am not attacking the officials. I want to be assured that these are not politically contrived numbers that have been imposed upon the estimates made by the officials."
Phillips also questioned the Government's projected growth in revenue from the special consumption tax (SCT).
"A significant portion of the SCT is levied on a fixed-rate basis (that is, on increases in volume), rather than on the value. So the Government is projecting a 9.7 per cent increase in revenues (that is to say, in volume of consumption), which is not likely to materialise. I ask, therefore, where will the 9.7 per cent growth in this tax type be expected to come from?"
He also said the projected growth of 6.3 per cent in income tax; seven per cent from corporate tax; and 2.7 per cent from individuals was questionable, particularly with respect to the 2.7 per cent growth in personal income tax.
According to Phillips, the pay-as-you-earn income tax paid by public-sector employees is a significant component of this tax.
In addition, he said the Government's wage bill is projected to grow by only $300 million, while the cost of the increase in the income tax threshold would result in a loss of revenue of $1.3 billion, "and yet they are projecting an increase in the income tax component of 6.3 per cent. The numbers just do not compute."