Tax revenues are expected to decline by $723.6 million or 33.1 per cent in the 2020-2021 financial year, states permanent secretary for Ministry of Economy Makereta Konrote.
In the 2020-2021 National Budget economic and fiscal update supplement, Ms Konrote stated that Government was likely to divest a further 24 per cent of its shares in Energy Fiji Ltd (EFL), which would provide additional inflows of around $200m in 2020-2021 financial year.
She said when compared with pre-crisis levels in 2018-2019, the decline was much larger, with tax collections down by $1354.1m or 48.0 per cent.
“Tax revenue projections take into account the expected economic contraction, slowdown in imports and decline in business activity,” she stated in the supplement.
“The forecast is based on recent monthly tax collections, which are almost half of pre-crisis tax out-turns, and expected revenue losses stemming from the large tax cuts in FY2020-2021.”
She stated total revenues that comprised tax and non-tax were estimated to be $1673.6m in 2020-2021 financial year, a decline of $1507.5m or 47.4 per cent when compared to the 2018-2019 financial year.
There are both upside and downside risks to the revenue forecast, she stated.
“On the upside, tax collections may exceed projections if borders open up and travel and economic activity pick up within FY2020-2021.
“Apart from this, Government is likely to divest a further 24 per cent of its shares in Energy Fiji Ltd (EFL), which would provide additional inflows of around $200m in FY2020-2021.”
She stated that these have not been factored into the revenue forecast, and “if realised, they would provide additional buffers and reduce borrowing requirements”.
