The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

A Cabinet minister yesterday said the Government was on course to beat its full-year Value-Added Tax (VAT) revenue target by around 20 per cent if present trends hold, with an “average” $28 million being collected per month.

Michael Halkitis, minister of state for finance, said the Christie administration’s view was “so far, so good, with Customs meeting its average monthly VAT revenue target of $15 million.

Speaking from Barbados, where he was attending an Inter-American Development Bank (IDB) meeting, the Minister added that the Government was “very encouraged with the compliance and submissions” from VAT registrants as the first deadline for quarterly filers passed last night.

Mr Halkitis said the pace of VAT returns being submitted to the Government had “accelerated” on Monday, one day before the April 28 deadline for March/first quarter tax payments to be submitted.

“We thought it was going well,” he added of the first-ever VAT quarterly filings. “A lot of people are waiting until the last. From what we saw yesterday, it [the filing pace] was accelerating at the end of the day.

“What we saw yesterday [Monday] was a rush during the course of the day, but we were able to handle any challenges. They [the VAT Unit] were expecting more of the same today.”

Mr Halkitis said that based on data he had seen before leaving the Bahamas yesterday, “a little over 50 per cent” of quarterly VAT filers had completed the returns/payment process by Monday.

“They were expecting more last night,” he added. “People are making the effort, and because it’s new for small businesses we’re trying to work with them and help them.

“We will not be heavy-handed, especially for those businesses trying to comply. So far, we’re very encouraged with the compliance and submissions.”

With the 5,600 quarterly VAT filers joining the several hundred monthly registrants in submitting returns/payments for March, this month is being seen as a key test of the Government’s new tax reform centrepiece for a variety of reasons.

Apart from testing whether the Government’s electronic filing system can cope with several thousand returns, many of which are likely to have been submitted in the final days and hours prior to the April 28 deadline, the latest filing will also go a long way to indicating whether the Government is likely to hit is VAT revenue targets.

Mr Halkitis said that, to-date, it was a case of “so far, so good” for VAT implementation, adding that the Government was “not disappointed” with the revenues generated by monthly filers - large businesses with annual turnovers exceeding $5 million - during January and February.

The Minister said the Government collected $28 million in VAT revenues for January, split between $17 million obtained from monthly filers and the $11 million generated by Customs at the border.

Indicating that this collection pace had been maintained for February, Mr Halkitis told Tribune Business: “Customs predicted an average of $15 million per month, which they have been meeting, and for April that’s going to be higher. We’ve been averaging roughly $28 million for the first two months, January and February.”

The Minister added that this revenue generation meant the Government was “on target or a little ahead” in terms of meeting its VAT objectives.

The Christie administration had projected it would earn $150 million in VAT revenues for the six months to end-June 30, 2015 - the second half of the present fiscal year.

And, for the 2015-2016 fiscal year, which will be the first full year of VAT, it had forecast the new tax would produce $300 million in new revenues.

“So far, if it holds, we’re looking at $350-$360 million,” Mr Halkitis told Tribune Business. “The early indications are that it’s coming in a little ahead of target.”

Based on those numbers, if VAT was to generate $360 million in gross revenues for the Government in a full fiscal year, that would mean it exceeded its collection targets by 20 per cent.

Mr Halkitis directed Tribune Business to John Rolle, the acting VAT Comptroller, for a further update on the March filings as last night’s deadline loomed.

However, Mr Rolle could not be contacted by phone, and did not respond to an e-mail seeking comment.