Lower tax take hits government finances
NZ operating deficit wider than expected as GST, PAYE tax take misses forecasts
Dec. 5 (BusinessDesk) - The New Zealand government's operating deficit was wider than forecast in the first four months of the financial year as the Crown clipped a smaller tax take on consumer spending and wages.
The operating balance before gains and losses (obegal) was a deficit of $2.87 billion in the four months ended Oct. 31, $169 million, or 6.3 percent, bigger than forecast in the May Budget. Core tax revenue was 1.6 percent short of expectations at $17.92 billion, with goods and services tax and source deductions from weak private consumption and tepid wage growth the biggest drag on the accounts.
The tax take from GST accruals was 4.9 percent short of forecast at $8.13 billion in the four month period, while source deductions missed expectations by 2.6 percent at $7.16 billion. Treasury officials said they expect the weakness in both revenue streams to continue through the year.
The total corporate tax take was 1.5 percent below forecast at $2.41 billion due to a smaller return from non-resident withholding tax.
Core Crown spending was 1.5 percent below forecast at $22.95 billion, with delays in health expenditure and less spent on welfare for fewer beneficiaries.
The under-spends were offset by higher than forecast expenditure on earthquake expenses from land zoning decisions, and the government has lifted its Christchurch 'red zone' provision by $234 million to $1.17 billion.
Including gains from the New Zealand Superannuation Fund and Accident Compensation Corp's investment portfolio, the Crown's operating deficit was $34 million in the period, a 98 percent improvement on the forecast shortfall of $1.96 billion.
Net government debt was near expectations at $55.47 billion, or 27.1 percent of gross domestic product.