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Gov’t revenues beat early goal by $50.6m

FINANCIAL Secretary Simon Wilson.

FINANCIAL Secretary Simon Wilson.

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Government’s top finance official yesterday said “close to $50m” in real property tax arrears has been collected during the 2022-2023 fiscal year’s first seven months as it seeks to crack down on tax and bill duckers.

Simon Wilson, the Ministry of Finance’s financial secretary, told Tribune Business the Davis administration is encountering “more positives than negatives” in its push to resolve the country’s fiscal crisis by eliminating persistent annual fiscal deficits and restoring national debt sustainability.

“I’ll give you one number: Real property tax arrears,” he said. “For this fiscal period we have collected close to $50m to-date. That tells you some of the success we have seen. We have got to work and focus on doing more. There are more positives than negatives. We are still seeing some negatives, but there are more positives.”

Mr Wilson spoke to this newspaper after the Government yesterday unveiled its Fiscal Strategy Report 2022 in the House of Assembly, which disclosed that total revenue collections for the first four months of the current fiscal year had beaten targets by $50.6m.

“As a result of improved economic conditions, coupled with revenue policy and revenue administration strategies articulated during the 2022-2023 Budget, revenue collections for the first four months of the fiscal year have exceeded Budget targets by $50.6m. While the improved revenue performance provides important context for the fiscal forecasts in future years, 2022-2023 fiscal forecasts remain as stated in the Budget,” the report said.

Noting that “any potential revenue windfalls from” the sale and trading of The Bahamas’ blue carbon credits have been excluded from the Government’s fiscal forecasts, the report said it is instead focusing on enforcement and compliance measures such as “the increased occurrence of VAT audits” by the Revenue Enhancement Unit and a “targeted” initiative aimed at collecting VAT, real property tax and Business Licence fee arrears owed to the Government.

Post-clearance audits of major importers by the Customs Department will increase, while the collection of VAT on vacation rental property lease payments is scheduled to start during the 2022-2023 fiscal year’s second half. The reassessment of New Providence property values, and reinstatement of Business Licence revenues for banks, is also expected to drive revenue increases in these areas.

And the Fiscal Strategy Report revealed that the Government is seeking to gain $75m from matching a company’s VAT filings with Customs import declarations to detect discrepancies between different tax payments. “With the current electronic Business License filling system, the Government has the ability to perform industry comparisons, and identify trends such as variances with VAT filings and Custom imports,” it explained.

“This allows real-time assessment of fillings prior to approval and enhancement of the post-approval audit process. Over the medium-term, these initiatives are expected to bring in an estimated $75m in revenue collections.”

Mr Wilson, meanwhile, confirmed that the Government wants to introduce electronic VAT invoicing and payment for all public services and agencies early in the 2023-2025 fiscal year in a bid to cut revenue leakage and boost efficiencies.

“We have identified a vendor for the e-billing for VAT,” he disclosed. “We are finalising discussions with the vendor, and hopefully will have it done by the end of this fiscal year, so by early in the next fiscal period it will be in place.”

“As Government continues its expansion of digitisation of services, over the medium-term government intends to introduce the e-invoicing and payment of VAT in a phased manner across all government agencies and services. Based on experiences from other countries who have implemented similar reforms, this process is anticipated to significantly reduce VAT revenue leakage and loss over the medium-term,” the Fiscal Strategy Report said.

Explaining that the initiative will “simplify” the VAT billing and remittance process”, the report added: “Similar to the design and strategy of similar programmes launched in other countries, such a strategy will allow for more efficient use of risk-based audit resources and the inclusion of artificial intelligence in the selection of audit cases.”

Elsewhere, the Fiscal Strategy Report indicated the Government is seeking to streamline “unnecessary” investment incentives and concessions, and will also “strive” to eliminate poorly-targeted tax relief schemes that persons who can afford to pay often exploit.

It promised that officials will “continue to monitor and review the Government’s tax concession regime structure to identify and reduce areas of unnecessary foregone revenue. The guiding principle for this policy will continue to remain a reliance on sound economic policy and international best practice.

“As such, the Government will strive, over the medium-term, to limit broad-based tax concessions which benefit persons with a ‘willingness to pay’ and offer more relief programmes targeted at those in need,” the Fiscal Strategy Report added.

Noting that the Government’s MyGateway online portal for public services has now received 100,000 customer requests, the Fiscal Strategy Report committed to funding micro, small and medium-sized enterprises (MSMEs) through the provision of $50m per year.

“During the worst of the COVID-19 lockdowns and curfew measures, MSMEs were an important source of income, with the number of licensed MSMEs expanding by 24.4 percent from 38,227 in 2020 to 47,550 in 2021,” the Fiscal Strategy Report said.

“Appreciating the value of MSMEs to the Bahamian economy, government intends to continue providing funding of $50m per year to further support the growth of MSMEs in addition to other traditional support to the farming and fishing community.”

Comments

Flyingfish 1 year, 5 months ago

So if we were doing this from the start we wouldn't be down so deep in the hole.

Sickened 1 year, 5 months ago

Now when he says government revenue beat targets by $50 million. Is that personal revenue for government officials or does he mean really mean revenue deposited in the people's consolidated account?

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