Government earned about $1.2 billion from taxes in the first three months of its new financial year as this revenue category towered over the $40.5 million from non-tax revenue and grants in the same period.
This is according to the latest information from the Ministry of Finance as shared in the Central Bank of Barbados’ half-year economic report.
It stated that Government’s total revenue reached an estimated $1.23 billion between April and June, the first three months of the 2025/2026 fiscal year. This was an increase over the $1.11 billion in the same period last year.
Of this amount, $1.19 billion was from tax revenue this year versus $1.05 billion last year. All information to follow relates to April to June of fiscal year 2025/2026 compared with the same three months of fiscal year 2024/2025.
Direct taxes led the way with $707.4 billion this year, mainly from corporation tax $416 million ($291.3 million in 2024/2025), personal income tax $155.4 million ($144.8 million in 2024/2025), and property tax $101.3 million ($116.5 million in 2024/2025).
Revenue from indirect taxes was $491.9 million this year, up from $468.1 million in 2024/2025. Most was from value added tax (VAT) $293 million ($273.9 million in 2024/2025). Other taxes included import duties $66.3 million ($64.4 million in 2024/2025), and excises $57.3 million ($58.7 million in 2024/2025).
Other taxes contributed $71.2 million this year ($67.1 million in 2024-2025), including $18.6 million
from fuel tax ($19.2 million in 2024/2025), and $14.1 million from the room rate/shared accommodation levy $14.1 million ($13.3 million 2024/2025).
Non-tax revenue and grants in the period was $40.5 million this year versus $66.2 million in the same time last financial year. This included $27.2 million from the two per cent foreign exchange fee ($26.8 million
in 2024-2025).
Reporting on Government’s fiscal performance in the January to June report on Friday, Central Bank Governor Dr Kevin Greenidge gave some context to the revenue performance.
“Higher corporate tax collections led the increase in total revenue during the first quarter of fiscal year 2025/26. Corporation tax receipts rose by $125.3 million, thanks to the asset dissolution of a large corporate group, stronger profitability, and larger payments under the new prepayment schedule,” he said.
“Personal income tax collections increased by $10.6 million to $155.4 million, while property tax revenue fell by $15.3 million due to a shift in the early payment discount period. Indirect tax receipts also increased, supported by growth in domestic activity and imports.
“Net VAT collections rose by $19.1 million, because of expansion in the accommodation and food sectors and higher import volumes. Import duties grew by $1.9 million, while net excise revenues marginally declined by $1.4 million, as revenue from fossil fuel vehicles continued to fall,” Greenidge stated.
The Governor confirmed that non-tax revenue and grants totalled fell by $25.7 million in the period, attributing this to a normalising of investment income “following the one-off declaration of a dividend by Government in fiscal year 2024/25”.
On the expenditure side, Ministry of Finance data reported by the Central Bank showed that recurrent expenditure in the first quarter of the 2025/2026 fiscal year was $759.6 million, up from $718.5 million in the same period in 2024/2025. This included transfers and subsidies $254.2 million ($252.1 million in 2024/2025), wages and salaries $221.4 million ($215.2 million in 2024/2025), interest payments
$158 million ($167.1 million in 2024/2025), and goods and services $126 million ($84.1 million
in 2024/2025).
Greenidge stated: “Interest payments decreased in the first quarter of fiscal 2025/26, largely due to savings from the debt-for-climate swap. Domestic interest costs declined by $12.9 million, as a result of savings from the debt-for-climate swap, which facilitated the settlement of some domestic debt.
“External interest payments increased by $3.8 million, resulting from the early settlement of the 2029 Eurobond. Recurrent expenditure rose across most categories despite a reduction in grants to public institutions.
“Grants declined by $22.6 million, but higher subsidies to the Transport Board and larger pension payments more than offset the reduction. Spending on goods & services increased by $41.9 million, due to higher payments for rent, utilities, operating costs, and professional services.”
He added: “Wages and salaries grew by $6.2 million, reaching $221.4 million at the end of the quarter. Capital spending expanded as Government advanced several major infrastructure projects.
“Capital expenditure rose by
$57.9 million in the first quarter of fiscal year 2025/26, as work continued work on the new geriatric hospital,
the payment for new garbage trucks, and the construction of two senior citizens’ villages.”
Government’s overall fiscal performance between April and June was such that it “recorded both overall and primary surpluses, . . .the result of strong corporation tax receipts”, said Greenidge.
Overall, he stated, “Tax revenue increased by $146.7 million, reflecting winding up activities, larger prepayments, and higher profitability among corporate taxpayers. Broader economic expansion also boosted revenue across most tax categories. “Expenditure focused on wages and salaries, goods and services, pensions, and capital projects. The overall fiscal surplus stood at $372.9 million, or 2.4 per cent of GDP, compared to $349.5 million in the same quarter of fiscal year 2024/25.
“The primary surplus reached $530.9 million, or 3.5 per cent of GDP, slightly higher than the $516.6 million a year earlier.”
Greenidge said in the Central Bank’s outlook for the rest of this year that Government’s finances were
“on a path of further strengthening”.
“The Government’s fiscal stance continues to prioritise the balance between supporting growth and ensuring debt sustainability,” he said.
“Building on a solid first quarter of the fiscal year 2025/26, which featured healthy revenue collections and a strong primary surplus, government remains committed to meeting annual fiscal targets through enhanced revenue and careful spending.
“Ongoing tax administration reforms and the adoption of new global tax standards are expected to improve collections, providing upside potential for government revenues. These efforts create space for continued investment in critical infrastructure and climate resilience initiatives, even as fiscal discipline
is maintained.”
He added that “sustained economic growth and prudent budget management are set to keep the public debt on a downward trajectory, with the debt-to-GDP ratio projected to decline steadily toward the 60 per cent benchmark by fiscal year 2035/36”.
“Favourable global financial conditions, including the prospect of lower international interest rates, could further ease debt servicing costs, reinforcing the positive debt dynamics,” Greenidge stated in
the forecast.
“Overall, the fiscal and debt outlook is one of gradual improvement, marked by continued surpluses, moderating debt levels, and increased resilience to future shocks.”
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