The Government pf Jamaica has flexibility that will allow it to adequately deal with the more than $20 billion revenue shortfall for the 2023/24 fiscal year, Finance Minister Dr Nigel Clarke has assured.
“If we do have to make adjustments, we have flexibility, including a downward revision of revenue. We have flexibility in that there are untapped sources of revenue that won’t place additional burdens on taxpayers,” said Clarke.
He was speaking during the question-and-answer session of the Caribbean Policy Research Institute’s (CaPRI’s) report launch and discussion of its analysis of the 2024 Budget on May 2 at the ROK Hotel.
Revenues for the 2023-24 fiscal year were $97.5 billion, an increase of 11.8 per cent above the previous fiscal year. However, that outturn was $22 billion less than the budgeted target.
At the same time, tax revenues for 2023-24 were 10.5 per cent or $78 billion above the 2022-23 fiscal year. But the amount was $25 billion below the targeted figure.
The main reason for the overall underperformance was a $14 billion shortfall in corporate income tax.
Clarke assured that there are possibilities to adjust expenditures without affecting priority programmes. He also pointed out that over the past several years revenues have over-performed the budgeted amount.
“This year ending March 2024 is an exception to the last several years,” he stated, while highlighting that the shortfall related to one tax type – corporate income tax.
“With the outcome in March, the one area that we definitely have to examine is the underperformance of corporate income tax,” the finance minister said.
He pointed out that for the full 12-month period, all other tax types of over-performed budget, including Pay As You Earn (PAYE) which was up 25 per cent when compared to the previous year, and General Consumption Tax which was up 21 per cent when compared to the prior year.
Clarke said corporate income tax was essentially flat, coming in at 0.8 per cent against the previous year.
“If there’s anything that gives me pause for the projections in the current fiscal year, it would be the outcome for corporate income tax that came out of the March data,” he said.
The finance minister said there was no need for any knee-jerk reaction as Tax Administration Jamaica has reported that a larger number of entities than is customary declared a liability but did not pay in time. Clarke said the Government was closely watching the situation to see how things unravel in the months of April and May and possibly June, before making any definitive moves or commitment.
“Suffice to say that if we do have to make adjustments, we have flexibility,” he insisted.
