The Tribune

By YOURI KEMP

Tribune Business Reporter

ykemp@tribunemedia.net

The Ministry of Finance’s top official yesterday the Government revenue is $210m above forecast for the 2021-2022 fiscal year-to-date and is expected to maintain that momentum through to end-June.. 

Simon Wilson, the financial secretary, speaking as the Revenue Enhancement Unit’s new Carmichael Road home was unveiled, disclosed that the Public Treasury’s income will likely close the fiscal year around $200m ahead of budgetary projections.

“We are running around $210m ahead of our projection, which would probably mean that we will end the year around $200m, which is around 10 percent higher than the projections, which is really, really significant,” he asserted.

“Normally when we see that projection it is usually because of an unexpected outlay, or transactions that we didn’t account for that came through. There is no one-off revenue in this amount. There’s a little bit of arrears money coming in, but this is really just the normal people paying the taxes which are due. There’s no windfall of taxes coming through. This is normal economic activity generating this yield, which is really good.” 

Mr Wilson did not specify whether the “projection” referred to was the $2.245bn estimate contained in the Minnis administration’s May 2021 Budget, or the $2.337bn set out in the Davis administration’s supplemental Budget late last year. However, either way, taking the $200m mentioned yesterday would result in full-year revenue of $2.445bn or $2.557bn - both of which would exceed the previous revenue record of $2.426bn set in 2018-2019 prior to COVID.

Those two totals would fall slightly short of a 10 percent-above-projections outcome, but not by much. Government officials have previously said the economy’s faster-than-expected reflation, driven by tourism demand and construction activity, together with the re-employment of many workers has boosted economic activity and the volume of VAT-attracting transactions that are taking place. 

However, given the regressive consumption-based nature of VAT and Customs duties, and the fact they are levied as a percentage of a good’s value, the current inflationary environment with its higher prices will also have aided government revenues. Senator Michael Halkitis, minister of economic affairs, last week acknowledged that inflation was an element in the revenue increase although he downplayed its significance.

And of the projection-beating $200m increase, some $92m of this occurred during the 2021-2022 fiscal year’s first quarter when the Minnis administration was in office. The Government also received a $23.5m windfall from the unexpected Bahamas Telecommunications Company (BTC) dividend payment.

Shunda Strachan, the Department of Inland Revenue’s acting director, yesterday said the agency aims “to increase annual revenue collections by $200m over the next two years, and to contribute to the Government’s target of reaching a 25 percent revenue-to-GDP ratio within the next five years”.

She added that the Department of Inland Revenue expects to collect much of this increase from real property taxes primarily because it is the “biggest tax type that really has the greatest amount of delinquencies”.

“So we are actively collecting real property tax,” she added. “I mean, I can’t emphasise that enough. We’re doing things really differently with real property tax. We’ve engaged with the banks, so we have begun sending real property tax statements. So, if you have a mortgage with the bank, chances are we have already or we are about to send your real property tax mortgage statement to your lender. 

“We expect that they will engage you and that they will settle those arrears, and that’s quite a significant amount of monies. So we are also engaging private collectors to help us with our foreign property owners.” 

Mr Wilson added: “All revenue categories, with the exception of Business Licenses, have seen a significant increase. Because Business License is a tax based on turnover it has seen a decline... But we’ve seen an increase in Customs duties. I think for the first two months of the year, we’ve seen an overall increase of $50m against a comparison of 2020. That’s a significant increase. 

The Government has seen increased revenues from VAT and real property tax. Mr Wilson described these as “significant increases driven not just by the new assessment, but by arrears being paid. In the first three months of the year, repayments on [property tax] arrears was $10m. In the last month of March, over $3m and near $4m, which was really significant because when we analyse that we can see there’s tremendous progress.

“We are overall very comfortable in terms of where we’re going. The numbers speak for themselves.”