Government has raked in close to $30 million more in revenue than expected at the end of the last fiscal year.
And Government’s Chief Economic Counsellor under the Barbados Economic Recovery and Transformation (BERT) programme Dr Clyde Mascoll has admitted that the Mia Mottley-led administration “missed an opportunity” to invest more in some sectors.
“I can tell you that at the end of March this year we were so pleasantly surprised by the performance of our revenue and we actually missed an opportunity to spend more,” Mascoll told the modest audience at the CFA Society of Barbados annual panel discussion at the Errol Barrow Centre for Creative Imagination on Wednesday night.
“We had a target of two per cent of GDP [gross domestic product] for a primary surplus, but we actually did 3.4 per cent. It meant that we could have spent at least $25 million more doing things for schools and doing things for health, but we missed the opportunity,” he said.
“But because we were trying to be cautious it meant that we did not get that opportunity and the reason we didn’t is because in remaining cautious in our forecasting of revenue, we actually did not anticipate that our VAT (Value Added Tax) collection would have been more than the 17 per cent that we were forecasting,” Mascoll explained.
Revenue intake for the fiscal year climbed to $2.99 billion or 29.3 per cent of GDB, of which a whopping $933.1 million came during the January to March 2019 period.
In delivering his economic review earlier this month, Central Bank Governor Cleviston Haynes reported that tax measures outlined in the June 2018 budget “boosted the revenue intake even though the resumption of timely payment of current year tax refunds offset some of the gains in revenue”.
Haynes added that the VAT and the fuel tax proved to be efficient sources of revenue.
Mascoll explained that in making its forecast, Government took a number of issues into consideration including possible changes in oil prices and a catastrophic event such as a hurricane.
He also pointed out that Government was “extremely worried” about the situation in Venezuela and tensions between the US and China.
“We do not want to see any outbreak of any activity at all, if not it is going to compromise everything,” he said.
“In order to protect against that we have been very cautious in our revenue forecasts and projections,” he added.
Insisting that it was “best to be cautious”, Mascoll said the overperformance of Government revenue intake implies there is “an underlying improvement in the economy” that Government hoped would continue through the second half of 2019.
He said the efforts made to improve the international reserves, lower the debt, shrink the fiscal deficit and stop central bank financing, was due to the leadership of the country.
He also explained that Government was being cautious in its forecast in relation to tax reliefs.
“We have proper systems by the way. We can easily go and look at 82,000 taxpayers in Barbados because of the information sent to BRA [Barbados Revenue Authority] and do forecast in adjusting the rates of the marginal tax and that kind of thing. So we know with some degree of certainty that we would lose X amount of income tax over the next year, but we have built that into the forecast and we have sought to recover in other areas,” he explained.
The central bank had reported that taxes on income were buoyed by improved performance of personal income taxes – $482 million, and corporate taxes – $356 million.