The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

Value-Added Tax (VAT) revenues hit $182 million for the first five months of 2015, driving the 33 per cent cut in the Government’s fiscal deficit for the first 11 months of its 2014-2015 fiscal year.

The Central Bank of the Bahamas’ monthly economic report for July, released yesterday, revealed that the Government’s deficit fell by $124.7 million due to VAT inflows that drove a 15.5 per cent rise in total revenues.

“Government’s overall deficit narrowed by $124.7 million (32.9 per cent) to $254.3 million over the 11 months of 2014-2015, explained by a tax-related $206.2 million (15.5 per cent) uplift in total revenues to $1.534 billion, which outpaced an $81.4 million (4.8 per cent) rise in aggregate expenditure to $1.788 billion “ the Central Bank said.

“Specifically, tax receipts surged by $209.9 million (18.3 per cent) to $1.36 billion, as VAT inflows totalled $182 million in the first five months of implementation and other non-trade Stamp taxes firmed by $30.2 million (23.1 per cent) to $161.1 million.”

The payment of ‘back taxes’ by the web shop gaming industry increased ‘selected taxes on services ‘ by $2.4 million or 5.1 per cent to $49.9 million, while departure taxes were up by $16.2 million or 14.6 per cent at $127.3 million.

“In a partial offset, declines were reported for taxes on international trade, of $8.2 million (1.6 per cent) to $518.5 million, as a $23.8 million (7.9 per cent) contraction in import tax inflows outstripped the $16.4 million (7.5 per cent) increase in excise tax receipts,” the Central Bank said.

“Similarly, business and professional fees fell by $10.5 million (5.9 per cent) to $169.4 million. Non-tax revenues declined by $6.7 million (3.8 per cent) to $170.3 million, led by a $15 million (30.2 per cent) reduction in income from ‘other’ sources, which was partly countered by an $8.1 million (6.6 per cent) rise in fines, forfeits and administrative fees.”

The Central Bank reported, though, that the Government continues to experience difficulty in holding back its recurrent (fixed cost) spending.

“Current expenditure rose by $92.7 million (6.5 per cent), occasioned by a $78 million (12.9 per cent) increase in transfer payments to $681.7 million,” it said, adding that almost 75 per cent of this sum was attributed to subsidies and other transfers due to the reclassification of items from other expense categories.

“In addition, increased external debt servicing obligations pushed interest payments higher by $22.1 million (10.9 per cent) to $223.5 million,” the Central Bank said.

“Consumption spending also grew, by $14.7 million (1.8 per cent) to $841.5 million, as a $33.8 million (6.1 per cent) expansion in wages and salary payments overshadowed the $19.1 million (7.1 per cent) reduction in goods and services outlays.

“In contrast, capital expenditure narrowed by $23.1 million (11.1 per cent) to $185.4 million, as asset acquisitions fell by almost 50 per cent following the purchase of defense vessels last year and outpaced a $20.4 million (17 per cent) gain in infrastructure-related spending.”

The Central Bank added that the May 2015 unemployment numbers were helped by “temporary hiring for cultural events” - a reference to the Bahamas Junkanoo Carnival.

It added that Baha Mar’s hirings had also boosted employment numbers, but both trends are now being reversed.