The forecasting process of tax revenue adopted by the Maltese Government

Abstract

Purpose: This study aims to analyse the forecasting process of tax revenue adopted by the Maltese Government. Therefore, this dissertation endeavours to examine this process and its importance. The study further seeks to identify the risks inherent in the process. Lastly, it intends to explore and assess the measures that are and may be undertaken to mitigate risks and improve the forecasting process of tax revenue Design: The objectives of this study were reached by conducting eight semistructured interviews with officials within the Ministry for Finance, Malta Fiscal Advisory Council, National Audit Office, National Statistics Office, and Office of the Commissioner for Revenue, as well as an independent institution. Findings: This study shows that the Maltese forecasting process of tax revenue consists of numerous stages, demonstrating the efforts the parties involved in the process make to obtain all the pertinent information to prepare accurate forecasts. This research further ascertains that the forecasting process of tax revenue is vital, albeit subject to risks which are never eliminated completely. Nevertheless, the Maltese Government undertakes measures to mitigate these risks and improve the forecasting process. Moreover, this research discovered some new initiatives which are not yet implemented and that could be introduced in the foreseeable future in the hope of making further improvements in the forecasting process of tax revenue. Conclusion: Tax revenue is the major income source for the government, which makes its forecasting process crucial. The process is also vital since the allocation of government spending depends on tax revenue forecasts, and because it provides information which is included in the reports required by the European Commission. Therefore, the management and understandability of this process are crucial. Consequently, it is essential to comprehend the risks involved in the process, and to take measures to reduce these risks, while improving the forecasting process of tax revenue. Value: This research offers insight into the forecasting process of tax revenue adopted by the Maltese Government. This study additionally provides new possible measures that can be undertaken to mitigate the risks and enhance the current forecasting process of tax revenue.