Tax revenues moving up, despite increased threshold — Clarke


Tax revenues moving up, despite increased threshold — Clarke

Senior staff reporter

Friday, January 18, 2019

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Despite lifting the income tax threshold from $1 million to $1.5 million in April 2017, the government continues to experience increasing personal income, or Pay As You Earn (PAYE), revenues.

Minister of Finance and the Public Service Dr Nigel Clarke told Wednesday night's Mayberry Investment Ltd (MIL) monthly investor forum that the continued increase “reflects” what is happening in the economy.

”When you look at the increases in tax revenues that we are seeing, we are seeing it in PAYE, although PAYE has been removed for more than 80 per cent of the people. So, how come PAYE is still over-performing! Well, it reflects what is happening in the economy,” Dr Clarke said.

He noted that not only was the government maintaining the seven per cent primary surplus, but that the 4-6 per cent range in inflation, a drop in unemployment below the 10 per cent mark and a 19 per cent decline in the poverty rate should also be noted.

“The fact is that the employment growth that is being reported by STATIN — not only is it real — but it is manifesting itself in the accounts of the government,” he noted.

“So, we are seeing PAYE and Education Tax moving ahead of budget. We are also seeing local GCT (General Consumption Tax) being ahead of budget. This is what is allowing us to finance the increased expenditures,” he added.

The increases Dr Clarke was referring to are included in the second supplementary estimates for 2018/19, which were approved by the House of Representatives last Tuesday. The estimates added $11.45 billion to the 2018/19 budget, pushing the total cost of expenditures from $791.11 billion to $802.56 billion.

However, he noted that the increased expenditure would occur within the context of the projected seven per cent primary surplus.

He explained that the expenditure has been matched by the increased revenue. Tax revenue is projected to increase by $10.4 billion and capital revenue/non-tax revenue increase is projected at $4.5 billion this year. This would cover the increased expenditure.

He said that there was also increased activity at the Kingston port, involving both imports and exports which are both greater than last year, and there is also an increase related to activities in the betting, gaming and lotteries sector.

However, Dr Clarke cautioned the public against getting too excited about the current increases, as it was only the beginning.

“All the revenue performance reflects increased economic activity, but I don't want us to get too high on that, so soon. We need this to happen for a long time, because we have been through a long period of under-performance which has led to under-investment in our social and physical infrastructure,” he argued.

“So, just to catch up, we are going to need this to be sustained for a long period of time, let alone to get ahead,” he said.

Mayberry's CEO Gary Peart, who welcomed the packed house, noted that the company has “some great things” in the pipeline for 2019, in addition to all the great things the government is promising for the year.

“I can tell on behalf of him (Clarke) and Mayberry, you will not be disappointed,” he added.

Mayberry Assistant Vice President for Marketing Anika N Jengelly chaired the function, which was held at its regular venue, the Knutsford Court Hotel, New Kingston.

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