Identifier
Created
Classification
Origin
05PORTAUPRINCE1326
2005-05-12 13:16:00
UNCLASSIFIED
Embassy Port Au Prince
Cable title:  

Haitian Tax Collection Trails Projections

Tags:  EFIN ECON PGOV HA 
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This record is a partial extract of the original cable. The full text of the original cable is not available.
UNCLAS PORT AU PRINCE 001326 

SIPDIS

STATE FOR WHA/CAR
EB/IFD/OMA
EB/IFD/ODF
WHA/EPSC
INR/IAA/MAC
STATE PASS TO AID FOR LAC/CAR
TREASURY FOR ALLEN RODRIGUEZ, GREGORY BERGER, WILLIAM
BALDRIDGE, LARRY MCDONALD
USDOC FOR 4322/ITA/MAN/WH/OLAC/ (SMITH, S.)

E.O. 12958: N/A
TAGS: EFIN ECON PGOV HA
SUBJECT: Haitian Tax Collection Trails Projections


UNCLAS PORT AU PRINCE 001326

SIPDIS

STATE FOR WHA/CAR
EB/IFD/OMA
EB/IFD/ODF
WHA/EPSC
INR/IAA/MAC
STATE PASS TO AID FOR LAC/CAR
TREASURY FOR ALLEN RODRIGUEZ, GREGORY BERGER, WILLIAM
BALDRIDGE, LARRY MCDONALD
USDOC FOR 4322/ITA/MAN/WH/OLAC/ (SMITH, S.)

E.O. 12958: N/A
TAGS: EFIN ECON PGOV HA
SUBJECT: Haitian Tax Collection Trails Projections



1. SUMMARY: Revenue collection for the first half of the
Haitian fiscal year is about 3.3 percent behind projections,
due mostly to slower than expected internal tax collection
(income tax and VAT). The Director General of Taxation
attributes the shortfall to on-going violence in Port-au-
Prince and delays in payment of taxes by several large
parastatals. Reduced government revenue will exacerbate
weaknesses in the economy and have political ramifications
by slowing spending on much-needed development projects and
potentially increasing public frustration with government
performance. END SUMMARY.

Total Revenue Collection Down
--------------

2. Figures provided to the Econ section by the Ministry of
Economy and Finance show that revenue collection for the
first half of fiscal year 2005 is about 3.3 percent behind
projections, at approximately USD 203.0 million instead of
the projected 209.9 million. (NOTE: The Haitian fiscal year
runs from October 1 to September 30 and figures are
converted into USD at the rate of 38 gourdes to 1 USD.)

Tax Collection 11.6 Percent Below Target
--------------

3. Most of the deficit is caused by lower than expected
internal tax collection (mostly income tax and VAT),at
136.7 million, rather than the projected 154.6 million, an
11.6 percent deficit. Another major component, customs
collection, trails projections by a smaller 3.3 percent at
53.4 million instead of 55.2 million. Other sources of
revenue were mostly higher, partially offsetting the low tax
collection numbers.


4. Tax collection trailed projections for each of the first
5 months of the fiscal year; only in the sixth month, March,
did revenues slightly exceed projections by about 1 percent.
Customs collection lagged strongly in the first quarter of
the fiscal year, but has since rebounded in the second
quarter and exceeded projections.

Violence and Deadbeat Parastatals to Blame
--------------

5. The Director General of Taxation told Econ Counselor
that the reduction in tax collection could be attributed to
two factors: first, the on-going violence in Port-au-Prince
that has slowed business activity and made tax collection
more difficult; and second, the delays in payment of taxes
by several large parastatals, such as the electricity
company. Customs collection was similarly effected by
violence, particularly around the port area in Port-au-
Prince in the first quarter of the fiscal year, and by a
Customs Department strike in December.


6. COMMENT: Reduced government revenue will exacerbate
weaknesses already present in the economy and will have
political ramifications. Revenue shortfalls will likely
slow implementation of much-needed development projects,
such as road improvements. Unfortunately, the rate of aid
disbursement, particularly for projects, is also behind what
the IGOH had anticipated. The IGOH cites budget problems as
one of the reasons it is slow to provide support to the
state-run electricity company, thus causing power cuts in
Port-au-Prince, worsening the frustration of the public with
the performance of the current government. END COMMENT.