Barbados Government expecting $840 million in VAT
Wednesday March 09 2011 | 04:57 AM

THE Barbados Government is looking to rake in at least $840 million from the Value-Added Tax (VAT) during the next financial year, starting April 1, 2011.

This is as Government announced a near seven per cent decline in its expenditure bill for the coming year, and a 5.7 per cent increase in projection revenue for that period.

These numbers are contained in the 2011/ 2012 Estimates of Revenue and Expenditure, which were laid in the House of Assembly yesterday by Leader of Government Business and Minister of Transport and Works, John Boyce.

They come against the background of a commitment to rein in expenditure while aiming for fiscal consolidation.

According to the document, spending during the coming year is projected at $3.5 billion, down from the revised figure of almost $4.0 billion for the current year. Revenues are estimated at $2.5 billion, compared to the revised figure of $2.3 billion.

There is shortfall of about $1.0 billion in relation to the spending and revenue projections for 2011/2012.

The VAT is the principal revenue measure and according to the Estimates, the amount projected for the coming year represents a whopping increase of $116 million above the revised estimates for the current year.

In an attempt to bolster the revenue side of its operations, Government last year raised VAT from 15 per cent to 17.5 per cent, but Mr. Sinckler promised that there will be a review of the VAT in a year’s time after the increase which became effective from December 1, 2010.

Taxes on incomes and profits are expected to realise $814.5 million, property taxes $129.0 million, taxes on international trade $216.6 million and Non-tax revenue $177.6 million.

Government said in the document that the overall fiscal deficit on the Accountant General’s basis is projected at just over $1.0 billion, 12.0 per cent of nominal Gross Domestic Product for the coming financial year.

However, when converted to the basis used by international financial institutions the fiscal deficit is projected 6.8 per cent of GDP.

A breakdown of the expenditures shows both increases and reductions for some of the main items which were at the root of calls for government to lower its spending programnme during the current financial year which ends on March 31, 2011.

Government said it will be allocating $431.4 million to goods and services in the new year, an amount which compares to the revised figure of $376.1 million for the current year.

However, transfers (to institutions and individuals) will absorb $787.1 million and capital Expenditure will be $251.5 million, an amount similar to the revised figure for current year.