Keith Collister, Gleaner Writer
Omar Davies, Minister of Finance and Planning, speaks at the budget debate opening for the 2006/2007 Budget Debate in Gordon House on Wednesday, May 10. - Rudolph Brown/Chief Photographer
Despite continued wage fights with an estimated 35,000 public sector workers, a big ticket item on the budget, Finance Minister Dr Omar Davies has spent $1.55 billion less than planned for a better fiscal outturn than projected in the first fiscal quarter.
The Finance Ministry had projected a deficit of $10.13 billion, but spending prudence slimmed it to $7.62 billion over the quarter, due to a combination of higher than projected revenues and grants and lower than projected expenditure of $56.867 billion.
Revenues and grants of $49.25 billion were $964.1 million more than budgeted, an outturn boosted by better than projected tax revenues which were $648.7 million, or 1.5 per cent, above expectations.
Tax revenue increases
"The fiscal accounts for June showed a slight slowdown in the pace of tax revenue increases, tax revenues rose by 15 per cent, compared with the a government target of 20 per cent for the fiscal year," said investment bank Bear Stearns in their latest piece of research on Jamaica.
Davies also culled $525 million from wages and salaries paid over the period, from $17.92 billion to $17.39 billion. But the heaviest savings were on the capital side of the budget, $1.73 billion.
Non-tax revenue of $2.93 billion was $768 million or 35.5 per cent above budget, and bauxite levy revenues were also $119 million or 12.3 per cent above budget.
Both capital revenues and grants were below budget by $199 million and $372 million respectively.
Income and profits at $18.59 billion were $1.08 billion or 6.1 per cent above the budget of $17.51.
This performance was driven entirely by tax on interest which at $6.01 billion was a massive 71.9 per cent or $2.51 billion over budget.
Income and profits
Less encouragingly, the tax gains were largely offset by every other category of income and profits, all of which under performed against budget, notably PAYE by $661 million, other companies $533 million, and other individuals by $189 million.
Production and consumption taxes underperformed against budget of $14.68 billion by 4.3 per cent or $629 million.
The major areas of underperformance were Special Consumption Tax (SCT) which was $548 million below budget and education tax at $141 million below budget.
International trade was $199 million or 1.7 per cent above budget of $11.5 billion due to Special Consumption Tax on imports being $483 million above budget.
This was offset by underperforming tax revenues from custom duty, which were $321 million or eight per cent below the $4.01 billion budget.
The control on spending was driven by capital expenditure, which was 28 per cent below budget.
But housekeeping, despite the cut in wage spend, was $178 million more than budget, driven by higher than budget domestic interest payments of $788 million.
For the corresponding quarter last year, Jamaica was also on track to meet its fiscal target, but missed the then balanced budget target for the full year.
