Clarke: Concerns about revenue shortfall ‘misplaced’
Published:Friday | May 3, 2024 | 12:15 AM
Minister of Finance and the Public Service Dr Nigel Clarke says concerns about the revenue shortfall in March 2024 are “misplaced”.
Clarke, who was responding to several questions raised about the development, including from senior economist Dr Peter-John Gordon, said by definition, there would always be either underperformance or overperformance.
He said how underperformance is dealt with when it occurs is what matters.
“We are dealing with this transparently with prompt disclosure and by being available to provide an account of the details. There is still work to be done to fully estimate the residual impact of March 2024 revenue outcomes,” Clarke told The Gleaner yesterday.
“However, in the scenario that revenues have to be adjusted downwards, Jamaica should be assured that the Government of Jamaica has the flexibility to tap into untapped revenue possibilities without placing an extra burden on taxpayers and to adjust expenditures while maintaining the commitment to the Government’s priority programmes and policies and to legislate targets,” he added.
His comment follows questions raised by Gordon, senior lecturer at The University of the West Indies, about the basis on which the Jamaican Government expected to meet its revenue target for the financial year, which ended in March with an announcement of no new taxes.
INCREASE IN TAX REVENUES
Further, Gordon had questioned what the underlying assumptions were that would lead to an expectation of an increase by almost 130 per cent of the increase in tax revenues from one year to the next, especially in light of there being no new taxes.
However, Clarke said tax revenues increased by $136.5 billion in 2022-23 over 2021-22 and not $45 billion as had been stated by Gordon.
The minister said tax revenues were expected to increase by $103.5 billion in 2023-24.
He said that, as such, the increase in expected tax revenues in 2023-24 was 24 per cent less than the increase of tax revenues in 2022-21 and not 130 per cent more as said by Gordon.
Additionally, pointing back to the tax revenue increase in 2022-23 over 2021-22, which was $136 billion, Clarke said the projection for 2023-24 over 2022-23 was at $103 billion, a lower figure.
“For the first 11 months of 2023-24 we were on track to surpass this,” he said.
He noted that consolidated tax revenues for the 11 months up to the end of February 2024 were ahead of budget by approximately $7 billion, emphasising that the underperformance was concentrated in March 2024.
“Even after factoring the underperformance of tax revenues in March 2024, for the full year 2023-2024 total revenues came in under budget by 2.4 per cent in 2023-2024 and the Government ended the year with a fiscal surplus of $1 billion,” the minister said.
“It should be noted that Jamaica has only recorded a fiscal surplus six times over the past 10 years.”
Meanwhile, Clarke said the Government is ahead of its target to achieve a debt-to-GDP ratio of 60 per cent by March 2028.
The debt-to-GDP ratio was 72 per cent as at March 2024 and is projected to be in the mid-60s by March 2025.