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Personal Income Tax and Revenue Forecasting - Research Paper Example

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The budget cycle reveals that revenue collection for the state follows a certain pattern in terms of a rising or diminishing rate in the amount of…
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Personal Income Tax and Revenue Forecasting
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Download file to see previous pages diminishing amount of revenue in the past three years in the month of December to January and April to May as the fiscal year comes to an end with an average rate of 15% and the revenue collection amount is registered high in the month of December every fiscal year. From the table of distribution of revenue collection in each year, the observation reveals that the revenue collection has been growing each year from the past financial year.
Thus, given that the revenue collection amount in the month of May has the pattern of decreasing by 15% from the collection of April, then the revenue amount that is likely to be collected on May of 2001 is expected to be 586,743 - (586,743*15%) = 586,743 – 88,011.45 = 498,731.55 makka. If the amount of revenue that is likely to be collected in May is 498,731.55 makka, the revenue collection for the fiscal year June 2000-May 2001 will amount to 940,975.1 + 967,098.4 + 841,267.5 + 874,308.1 + 887,091.4 + 936,090.7 + 1,304,961.7 + 714,981 + 575,115 + 583,592 + 586,743 + 498,731.55 = 5,200,214.95 makka. Thus, the ministry target of revenue collection of 778,900 makka, given the past revenue pattern, will fail to be realized and will be required to be reviewed to a target of 5,200,214.95 makka.
The factor that may affect the pattern of the revenue collection in Vadar Republic can be an economic scenario in the overall state and in the region which includes the economic trend (Baumol and Blinder 389). During the different months within the budget cycle, different economic events might be happening in some months that boost the income level of the citizen and returns of businesses in that particular period. For instance, during the month of December the country registers the highest level of revenue collection. This could be contributed to the festive season that accompanies the month of December, which means a lot of people engage in activities that increase the revenue that businesses make. A high revenue on the part of the ...Download file to see next pagesRead More
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