Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Faltering tax take hits government 1H accounts

NZ govt 6-month operating deficit bigger than expected as tax take trickles in

By Paul McBeth

Feb. 21 (BusinessDesk) - The New Zealand government’s operating deficit was wider than expected in the first half of the 2014 financial year, with a smaller than forecast tax take across the board confusing officials as to whether this was a temporary anomaly or something more permanent.

The Crown’s operating balance before gains and losses (obegal) was a deficit of $1.79 billion in the six months ended Dec. 31, $380 million wider than forecast in its Dec. 17 half-year economic and fiscal update, and down from a shortfall of $3.19 billion a year earlier. Core tax revenue was $602 million below forecast at $29.18 billion.

“At this stage it is difficult to determine how much of the lower than forecast tax is temporary versus permanent, but we expect this to become clearer over the next few months,” the Treasury’s acting chief government accountant Fergus Welsh said in a statement.

The smaller tax take was across the board, with GST 2.3 percent below forecast at $7.5 billion, source deductions for personal income tax 1.2 percent below forecast at $11.71 billion, and total corporate tax 4.9 percent below expectations at $3.56 billion.

Treasury officials said some of the lower GST take was due to earthquake related refunds, and that the shortfall in Pay As You Earn might be short-lived. The corporate tax take shortfall was smaller than in the previous month, though “other negative factors (relative to forecast) within corporate tax remain, suggesting some downside risk to the full-year corporate tax result.”

The government expects to post an obegal deficit of $2.3 billion in the current financial year ending June 30 before returning a surplus of $86 million the following year. Treasury officials are picking accelerating tax revenue growth as an expanding labour market provides more income tax, and as rising wages get caught in the fiscal drag of people entering a higher tax bracket.

The Crown’s expenses were in line with expectations at $34.69 billion in the period, with higher than expected defence spending offset by delays to finalising negotiations in Treaty of Waitangi settlements.

The core residual cash deficit was $653 million higher than forecast at $7.27 billion largely due to the smaller tax take. The cash balance is forecast to return to surplus in 2017, after which the government plans to start reducing debt.

The Crown’s net debt was larger than expected at $62.3 billion, or 28.8 percent of gross domestic product, while gross debt was below forecast at $82.98 billion, or 38.4 percent of GDP.

The operating balance, which includes movements in its investment portfolios and actuarial adjustments, was a surplus of $3.16 billion, $1.57 billion ahead of the December forecast due to net gains from equities from the government’s investment portfolios such as the New Zealand Superannuation Fund. That compares to a surplus of $1.71 billion a year earlier.

(BusinessDesk)


© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Must Sell 20 Petrol Stations: Z Cleared To Buy Caltex Assets

Z Energy is allowed to buy the Caltex and Challenge! petrol station chains but must sell 19 of its retail sites and one truck-stop, the Commerce Commission has ruled in a split decision that acknowledges possible retail price coordination between fuel retailers occurs in some regions. More>>

ALSO:

Huntly: Genesis Extends Life Of Coal-Fuelled Power Station To 2022

Genesis Energy will keep its two coal and gas-fired units at Huntly Power Station operating until 2022, having previously said they'd be closed by 2018, after wringing a high price from other electricity generators who wanted to keep them as back-up. More>>

ALSO:

Dammed If You Do: Ruataniwha Irrigation Scheme Hits Farmer Uptake Targets

Enough Hawke's Bay farmers have signed up for water from the proposed Ruataniwha Water Storage Scheme for it to go ahead as long as a cornerstone institutional capital investor can be found to back it, its regional council promoter announced. More>>

ALSO:

Reserve Bank: OCR Stays At 2.25%

Reserve Bank governor Graeme Wheeler kept the official cash rate at 2.25 percent, in a decision traders had said could go either way, while predicting inflation will pick up as the slump in oil prices washes out of the data and capacity pressures start to build in the economy. More>>

ALSO:

Export Values Down: NZ Posts Biggest Annual Trade Deficit In 7 Years

New Zealand has recorded its biggest annual trade deficit since April 2009, reflecting weaker prices of agricultural commodities such as dairy products, beef and lamb, and increased imports of vehicles and machinery. More>>

ALSO:

Currency Events: NZ's New $5 Note Wins International Banknote Award

New Zealand’s new Brighter Money $5 note has been named Banknote of the Year in a prestigious international competition. The $5 note was awarded the IBNS Banknote of the Year title at the International Bank Note Society’s annual meeting. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news