FINANCE Minister Nigel Clarke is now carefully watching tax intake for the current fiscal year that began a month ago on April 1 as new data published Tuesday show the revenue source declined more than expected.

Tax revenues fell $28 billion below target due mostly to corporate income tax being $14 billion lower than the Government had expected in March alone, and already the Government is sounding the alarm that if the shortfall extends into the months ahead, it could impact the $1.3 trillion spending plans outlined in the recent budget debate.

“It’s something I have to keep my eyes on,” Clarke told the Jamaica Observer shortly after the data was released.

“Several entities/individuals who filed did not make the indicated tax payments within the required timeline. The Government will be pursuing payment related to these returns via its comprehensive compliance systems,” Clarke wrote in a release.

He outlined that the lower revenues were due to changes to the International Financial Reporting Standards (IFRS) which have resulted in lower taxes being declared by a number of financial institutions.

“The impact of the changes to the accounting standards is being closely examined by Tax Administration Jamaica,” he said, noting that “the financial sector reported profit levels below that of the prior year and therefore lower taxes were remitted in March 2024”.

On the evidence seen so far, Clarke is already warning that “the underperformance of revenue in March 2024 has implications for the programmed revenue estimates for FY 2024/25. The Government has therefore commenced an assessment of the options to ensure prudent fiscal operations and the attainment of legislated targets”.

Asked to clarify if the information means spending cuts are being programmed, Clarke told the Business Observer, “This is new information. This is information we only know April 30 every year and we have to incorporate this new information in our plans.”

He pointed out that with a lot of companies declaring, but yet to file tax payments, “we have to see how successful Tax Administration Jamaica is in chasing those people down”.

But all is not gloom. Clarke pointed out that with intake from general consumption tax up 21 per cent and from personal income tax up 25 per cent, it shows that spending remains bouyant.

“It appears that firms can’t pass on all their costs, including interest costs, and so their profit margins are being squeezed, so we have to examine it in more detail,” he added in a short chat with the Business Observer.

But that aside, it was pointed out that despite the development, the country’s debt-to-GDP ratio at the end of March was 72.2 per cent, which is ahead of target. The Government is aiming to reduce the debt to around 60 per cent of GDP by March 2028. Clarke said the trajectory is that it could reach close to that level, the mid-60s by March next year.