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

 

Interest Rates: Wheeler Hikes OCR To 3% On Inflationary Pressures, Eyes Kiwi

Reserve Bank governor Graeme Wheeler lifted the official cash rate for the second time in as many months, saying non-tradable inflationary pressures were "becoming apparent" in an economy that’s picking up pace and he's watching the impact of a strong kiwi dollar on import prices. More>>

ALSO:

Scoop Business: Equity Crowd Funding Carries Risks, High Failure Rate

Equity crowd funding, which became legal in New Zealand this month, comes with a high risk of failure based on figures showing existing forays into social capital have a success rate of less than 50 percent, one new entrant says. More>>

ALSO:

Scoop Business: NZ Migration Rises To 11-Year High In March

The country gained a seasonally adjusted 3,800 net new migrants in March, the most since February 2003, said Statistics New Zealand. A net 400 people left for Australia in March, down from 600 in February, according to seasonally adjusted figures. More>>

ALSO:

Hugh Pavletich: New Zealand’s Bubble Economy Is Vulnerable

The recent Forbes e-edition article by Jesse Colombo assesses the New Zealand economy “ 12 Reasons Why New Zealand's Economic Bubble Will End In Disaster ”, seems to have created quite a stir, creating extensive media coverage in New Zealand. More>>

ALSO:

Thursday Market Close: Genesis Debut Sparks Energy Rally

New Zealand stock rose after shares in the partially privatised Genesis Energy soared as much as 18 percent in its debut listing on the NZX, buoying other listed energy companies in the process. Meridian Energy, MightyRiverPower, Contact Energy and TrustPower paced gains. More>>

ALSO:

Power Outages, Roads Close: Easter Storm Moving Down Country

The NZ Transport Agency says storm conditions at the start of the Easter break are making driving hazardous in Auckland and Northland and it advises people extreme care is needed on the regions’ state highways and roads... More>>

ALSO:

Get More From Scoop

 
 
Computer Power Plus
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news