Gov’t expects to collect more this year
By AATAI JOHN
THE GOVERNMENT expects to increase its local revenue collections this year by $151 million from last year, Finance minister Manasseh Sogavare says.
Handing down this year’s $4.068 billion budget in parliament on Monday, Mr Sogavare said $3.5 billion of the total budget will be sourced locally.
Last year’s local revenue collection stood at $3.392 billion.
Mr Sogavare said Inland Revenue will collect $1.99 billion, Customs, $1.097 billion, while other ministries will collect $537 million.
“The government already approved two new revenue measures that are likely to boost additional revenue in 2018 by about $81 million,” Mr Sogavare said.
“First is on the import duty on fuels,” he added.
“The Import duties for fuels are currently applied as a specific tax (a set amount per litre of fuel), similar to the excise arrangements for tobacco and alcohol.
However, unlike our excise arrangements, the import duties on fuels have not been adjusted in over 20 years and therefore the value of the duty has been severely eroded by inflation over time.
“As such, the import duty charged on petrol, diesel, distillate fuels and other gaseous fuels has been increased.
“With the introduction of the revenue measure, we projected to collect an additional $75 million in 2018.
“The increase has been effective as of mid-February 2018.”
The finance minister said the second revenue measures was on the withholding tax.
He said the additional withholding tax will be applied to payments where there is traditionally high non-compliance, being: payment to non-residents for the lease of property and payments to resident taxpayers for professional services and management services.
“Applying withholding tax to these payments will clarify the tax obligations in these cases, simplify compliance costs for such taxpayers and improve overall tax compliance.
“We projected to collect an additional $11 million in 2018. The changes have already taken effect as of 1st of March 2018.”
Mr Sogavare has also announced huge cuts in the Development Budget.
He said the government has strategically reduced the development budget by 52 per cent or $639 million in 2018.
“The allocation of scarce resources to Government investments has deliberately been reduced for 2018.
“First and foremost, the basic operations of Government and fiscal discipline have taken precedence over any investment decisions.
“ Secondly, the Development Budget has grown exponentially since 2015, with the budget seeing nearly a 50% increase from 2014 to 2015, increasing the budget from $785 million to over $1.1 billion and the Development Budget has been funded at similar levels for 3 years consistently.
“Given our current situation and the limited availability of information on the progress of many ongoing projects, the Government has made a concerted effort to defer and delay several non-performing projects, which realistically won’t be executed or completed successfully in the remaining 8 months of the year.
“We are trying to deliver a credible and realistic budget for 2018, therefore all budgetary allocations have to be supported with some assurance that the resources that have been targeted will be delivered successfully.”
