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Crown accounts confirm no room for spend up

Crown accounts confirm no room for spend up

Another month of revenue running below forecast has again pushed up the deficit and reinforces the need for restraint in government spending, Finance Minister Bill English says.

“We remain committed to reaching surplus next year and Budget forecasts next month will confirm we are on track,” he says. “But today’s figures confirm what we have said repeatedly: It is a challenging task that will be achieved only if we remain disciplined.”

The Government’s financial statements for the eight months to 28 February show the operating deficit before gains and losses at $1.4 billion, or $884 million more than expected, due mainly to lower than-forecast core Crown tax revenue.

Consistent with a growing economy, tax revenue was $1.9 billion (or 5 per cent) higher than at the same time last year – reflecting increases in source deductions, other persons’ tax and GST. However, tax revenue was $1.1 billion less than forecast in the Half-Year Update in December.

“While some of the variance is due to timing issues and is therefore likely to dissipate over coming months, corporate tax, GST, other individuals’ tax, source deductions and customs and excise duties were all below forecast,” Mr English says.

“These figures will be factored into next month’s Budget and reinforce the need for restraint in government spending. They also confirm that there will be no capacity for reckless spending promises ahead of the election later this year.”

Continuing strength in equity markets saw gains of $3.5 billion on financial instruments, which was $1.9 billion ahead of forecast. As a result, the Government’s operating surplus at $3.7 billion was $891 million higher than forecast.


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