CI Times Weekly | Current Issue 256 | 23 June 2008
The Budget: Where the money comes from
Government aims to spend around $110.5 million in 2008/2009 financial year. Where does the funding come from?
In his financial statement to the House, Finance Minister Sir Terepai Maoate indicates most of the funding ($83.5 million) is estimated to come from Taxation Revenue.
Nearly half (42%) is projected to come from VAT. According to the Budget document, a further $5.6 million is estimated to come from other Crown Revenue, These are items like fees and dividends. Therefore, $89.1 million is estimated to come from Crown Revenue.
A further $21.1 million will come from aid donors. The rest is from surpluses.
The Minister indicates in his statement to the House that growth in taxation types are expected to grow slower than in previous years as it is projected underlying growth in the economy will begin to level off in 2008/2009.
The above estimates are based on moderate growth and analysis of critical economic indicators. Visitor numbers, a key economic indicator, are predicted to increase by 2.7% over last year but leveling out at 2% over the medium term. This is below the 3% growth expected previously.
Considering global events, the next three months will be crucial for government and the Minister said the hope of strong growth in our economy will be under pressure.
With the price of oil set to rise higher still, it would come as no surprise if the Minister produces a second supplementary budget.
