News 21 Aug 2018
A massive surplus of about $36.7 million was recorded in the net operating balance of the general government sector for the 12 months ending June, 2018.
In the final quarterly report for the 2017/18 financial year released yesterday, the operating balance for the period ending June 30, 2018 was about $37.2m, compared to the government’s estimated figure of $485,000.
In a statement, the finance ministry said the favourable result was driven mainly by higher revenue collection of about $28.1m, followed by savings in overall operating expenditure by about $8.7m.
“Taxation collection accounted for $22.18 million of the variance in revenue and largely attributed to the additional tax collected as part of the tax amnesty programme implemented during the year in addition to the increased economic activities evidenced by increased visitor numbers,” the ministry said in its quarterly financial report.
“The tax amnesty programme implemented resulted in higher taxation collection with Company tax collected at $8.86 million higher (69 per cent up) followed by Income tax at $5.63 million (24 per cent up) and Value Added Tax at $4.76 million (8 per cent up).”
The report also said the tax amnesty has positively impacted on numerous taxpayer’s financial position by elevating them from a net loss carried forward position (i.e. not paying income tax) to having a net profit tax position and paying income tax.
“This came about through the filing of outstanding income tax returns over a number of years by a given taxpayer. The result was more taxpayers actually having income tax liabilities who previously were carrying forward net losses.”
The overall fiscal balance for the reporting period was about $23.9m, which the government said demonstrated about $75m saving, mainly as a result of delays in capital and infrastructure implementation.
Spending on planned capital projects were below budget estimates by about $38.4m driven largely by delays in implementation of Manatua Cable, Te Mato Vai Rarotonga water upgrade, Renewable Energy project and Water and Sanitation project, the report stated.
“It is worth noting that these savings are temporary in nature and funding will be spend when they are ready to be implemented.
“This creates fiscal space however for other important unforeseen projects that can be considered in the short term.”
Source: Cook Islands News