Ashford W. Meikle, Business Reporter

Dr. Omar Davies, Minister of Finance and Planning. - File

Finance Minister Dr. Omar Davies indicated Wednesday that he would be going more aggressively after tax dodgers to plug revenue gaps in the budget year ahead.

"You will see a much more aggressive collection by the tax authorities [and] you will see much stronger adherence in terms of compliance efforts," said Davies speaking at an investors' forum Wednesday night.

"We will be utilising information technology to cross-reference and ensure that as high a percentage as possible - it will never be a hundred per cent - which is due and payable [is] received," he warned.

If what Davies says is a signal of how he plans to fund the 2007/2008 Budget, then it will hardly deviate from last year's budget, which saw the absence of a tax package.

The Government's November accounts indicate a more than $29 billion fiscal deficit - the amount by which expenses are running ahead of revenues - that were $1.8 billion more than expected.

Inability to meet targets

The Finance Minister blamed the Government's inability to meet its 2006-2007 fiscal targets on higher-than-expected costs associated with MoU2, post-hurricane reconstruction costs and the cement crisis.

To increase tax collection, Davies noted that the Government was getting international help to modernise the revenue system.

"We have been getting some external assistance from the International Monetary Fund (IMF)," he said of the IMF Technical Assistance Mission's recommendations. Other tax collection restructuring measures include:

1. Legislative amendments to enhance the collection process.

2. Improved audit selection and execution.

3. Collections through third parties for greater ease and access for payment of taxes.

4. Improved technological solutions to include e-filing and expand e-payment as well as to allow for online taxpayer account enquiry.

The Government, Davies said, faced four major fiscal challenges: MoU2 costs, post-hurricane reconstruction costs, the inability to offload its 20 per cent stake in the Jamaica Public Service Company and low inflation.

"The [MoU2] cost us a little more than we had anticipated - we had assumed we would have done something in the range of [12 per cent in the first year, eight per cent in the second year] but, by and large, we did - 15 per cent in the first year and five per cent in the second year."

By Davies' estimates, the wage-cap agreement with the unions will cost the Government $4.2 billion more, or 0.6 per cent of the Gross Domestic Product. But, having frontloaded the payments by taking on the 75 per cent portion in the first year, it is expected that increase in the payment for wages and salaries for 2007-2008 will be less.

- ashford.meikle@gleanerjm.com