The government is facing a $31.3 billion revenue shortfall, forcing it to cut spending by more than $34 billion during the first five months of the current fiscal year.
New data from the Ministry of Finance and The Public Service show that total revenues and grants amounted to $428.6 billion for April to August — $31.3 billion dollars below the budgeted target.
Tax collections were also weaker than expected, totalling $401.5 billion, or $21.7 billion below target.
The shortfall has prompted the government to reduce total expenditure by $34.5 billion to $486.9 billion — a 6.6 per cent cut.
The capital budget was reduced by $4.6 billion to $26.7 billion, while recurrent spending — covering the government’s day-to-day operations — was cut by almost 30 billion dollars, from $490 billion to $461 billion.
The Finance Ministry says the weaker revenue performance reflects the impact of the economic downturn on consumer demand and corporate profits.
Income and profit tax collections totalled $132.7 billion; that’s $18.3 billion below target.
Corporate income tax collections accounted for 45 billion dollars, falling $13.4 billion short of the $59.1-billion-dollar target.
PAYE collections amounted to $68.6 billion, about two billion dollars below target.
International trade taxes generated $147 billion; that’s $6.3 billion below the amount programmed. Customs duties accounted for $29.6 billion of that total — about three billion dollars below the government’s target.
The Finance Ministry says the weaker-than-expected tax collections are being driven by the current economic conditions.