Collection of PAYE taxes up to February, is ahead of target by $1 billion, according to data put out by the Ministry of Finance.
This category of individual tax contributions, was projected to generate $47.3 billion but contributed $48.3 billion instead, up to February.
The out turn is quite remarkable when viewed against the out turn at the end of December when there was a shortfall of $1.24 billion. For 2018 up to February, PAYE pulled in $2.3 billion more than planned or just over $1 billion more, monthly.
The current government, raised the personal tax threshold on which no taxes are paid, to $1.5 billion over a two year period, starting in July 2016 with the first tranche, with the second portion implemented in 2017. The estimated cost for the measure was over $25 billion in the current fiscal year. The government announced increased taxes to fund the give back, but data for the last two fiscal years show revenues increasing well in excess of forecast, an indication that there was no fiscal need, to effect the tax increases that were made at the time of implementing the threshold hike. Ongoing buoyancy in government revenues would have more than compensated for taxes lost but IMF demanded the increases apparently to stave off inflationary pressures that would have arisen if the increase in take home pay was not neutralised.
PAYE out performing forecast
Jamaican Government revenues short $3.5b
A $2.5 billion shortfall in the collection of company tax and a $2 billion shortfall in the collection of grants, offset by some areas that over performed, resulted in the overall tax take for the first 3 months of the 2014/15 fiscal year to June, falling short of budget by $3.5 billion revenues.
On the expenditure side, reduced payments of $2.3 billion for non-wages and interest and a billion less in the wage bill, coupled with a $3 billion reduced capital spend, helped to cut expenditure by $6.3 billion, leaving the fiscal deficit better off by $2.8 billion.
Revenues came in at $93 billion for the three months and expenditure at $110 billion, for an overall fiscal deficit of $17 billion.
Areas of revenues that were major out performers are, PAYE with $578 million or 3.6 percent, tax on dividends, $100 million or 24 percent, tax on interest, $726 million or 255 percent, special consumption tax on local goods $737 million or 27 percent, education tax, $231 million an increase of 5 percent.
Local GCT fell sort by 5.5 percent amounting to $792 million, GCT on imports fell short by 5 percent or $723 million.
$1m for 2016, $1.5m in 2017
Minister of Finance Audley Shaw should announce a $1m plan for 2016 and $1.5m for 2017 in his budget presentation today.
At the same time, interest cost on the government debt, will decline as interest rates fall, notwithstanding the increased amount in the budget this time around for interest. The increase is to accommodate the interest on the Petrocaribe Fund debt which will be recovered from the Fund.
Interestingly, former Prime Minister Bruce Golding and an active participant in the 2016 election campaign for the JLP gave a speech in April in which he suggested that the implementation should be done to maintain simplicity and equity in the system. He made two proposals. The more important one was for an across the board threshold of $1 million. It would appear that Golding was testing the waters for a modification in the $1.5 million plan at least initially, that would have affected only some on the PAYE system.
Jamaicans should get the news that for 2016 the PAYE threshold will be $1 million, with it going to $1.5 million during 2017. It is unclear if the $1.5 million will be across the board or not. But with tax reform to be implemented probably in 2017, it seems as if it will be an across the board threshold.