23 June 2005

Transport to benefit from tax boon

“Motorists, commuters and businesses will benefit from a one-off increase in the government’s tax take as the financial industry responds to new tax law,” Finance Minister Michael Cullen said today.

He was commenting on the release of data showing the tax take for the 11 months to the end of May was running $544 million ahead of forecasts.

“Company tax was the main driver of the above-forecast tax take, accounting for $368 million of the $544 million variance.

“This increase is expected to flow through to the final outcome for the year ended 30 June but not to subsequent years because a significant proportion of it is due to some large, unexpected payments from the financial sector relating to previous tax years.

“Because the extra revenue this year is likely to be one-off rather than ongoing, sensible fiscal policy dictates that it should be used to fund initiatives which are also one-off,” Dr Cullen said.

“Accordingly, the government will invest an additional $500 million in improving the transport network and wiping out a legacy of persistent under-investment in the tax-cutting, expenditure-cutting 1990s.

“This increase is on top of the extra $100 million a year for the three years from 2006-07 announced in Budget 2005 and demonstrates the government’s commitment to building the infrastructure needed to support strong economic growth.”

ENDS

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