Chamber of Commerce president Philip Barnett has suggested it's time for tax cuts after Government saw its payroll tax receipts soar to $78 million in the first quarter of this year — up almost 21 percent on the same period last year.

The figure is revealed in the detailed breakdown of the Quarterly Bulletin of Statistics, which indicates an 11.4 percent rise in Government revenues overall in the three months up through March 2007.

The amount of payroll tax collected soared by nearly $12m compared to the last quarter of 2006. The rate of the tax has remained unchanged, so the rise would appear to indicate a surge in the Island's payroll, possibly through more jobs and higher wages.

The figures in the bulletin are subject to revision.

"What it points towards is that the economy is booming as payroll tax is a reflection of what people are getting paid," Mr. Barnett said on being told of the figures yesterday.

"What it should do is to preclude any thought of tax increases and what we should actually be seeing is a tax decrease. Are we going to see increased services based on increased revenue?

"In a situation where payroll tax revenue has increased so dramatically, we need to make sure the Government is appreciating how much business is contributing."

At least 8.75 percent of the 13.5 percent payroll tax burden must be paid by the employer and earlier this year previous Chamber president Peter Everson said the tax burden was persuading some local, as well as international, businesses to outsource jobs to places like Canada and India.

Second-quarter payroll tax revenues may well rise again. Up to the end of March, any income over $235,000 was not subject to the tax, but from April, high earners had to pay more, as the payroll tax cap was raised to $350,000.

Finance Secretary Donald Scott said yesterday the Government was pleased with payroll tax receipts in 2006/07 as the first quarter marked the end of the Government's fiscal year. He added there were no plans for tax cuts.

"The noticeable increase in Q1 2007 payroll tax receipts was a reflection, in part, of the strength of the underlying economy," Mr. Scott said yesterday.

"The increase also reflected, in part, an encouraging rise in tax-payer compliance as a result of the diligent audit work on payroll tax assessments carried out by the compliance team in the Office of the Tax Commissioner."

Mr. Scott added that the tax had been restructured to ease the burden on small and medium-sized businesses in recent years. And new businesses locating in the Economic Empowerment Zone will be charged payroll tax at the rate of 4.75 percent in their first year, an incentive that became effective this week.

"Customs duty concessions are in place for hotels, restaurants and a range of other businesses," Mr. Scott added. "Other forms of tax concessions are operative as well, for example land tax and stamp duty on the primary family household.

In many ways, these concessions are paid for through the continued strong performance of the payroll tax.

"As the Ministry of Finance looks toward the balance of this financial year, the revenue targets set in the 2007/08 National Budget have been locked in. The revenue targets are based on projections that build in an estimate of the economy's growth. "Therefore, a reduction in any of the major tax rates could lead to an increase in the borrowing requirement for the capital investment plan as a result of a revenue shortfall.

"Accordingly, no reduction in tax rates are being contemplated at this time."

While Government revenue for the first quarter totalled almost $270m, compared to $191m in the previous quarter, public spending totalled $242.7m.

Although this marked a 25 percent increase for the same period in 2006, a significant part of that rise was the $23.7 million paid out in debt repayments and servicing.

Government wage expenditure rose 3.1 percent, other goods and services 36 percent, grants and contributions 24 percent, and capital expenditure dropped one percent.

Other highlights among the glut of statistics include a 30.7 percent rise in gross receipts for the hotel industry to $42.3m, an indication that increased visitor numbers are translating into a significant income boost for hotel operators.

However the bulletin also showed the hotel sector had 10 percent fewer jobs at the end of January this year than it had at the same point in 2006, with 2,452 people employed at that point.

There was also evidence of a slowdown in the construction of residential units, with 53 new units completed in the first quarter, the lowest number for two years. But the boom continued in the construction of shops, offices and warehouses, which had a value of $19.9m put in place during the quarter, up 21 percent on the same period a year earlier.