Lower Tax Receipts Confirm Downturn - Hide
Fresh tax receipts data for the two months to August show reductions in two key indicators of economic activity, says ACT Finance spokesman, Rodney Hide.
“Both source deductions for individuals and net GST collected by Inland Revenue are down on Government estimates, pointing to a slowing down in the economy.
* Source deductions (from wages and salaries) are down by $53 million on estimates, a reduction of 2.4%. * Net GST collected by IRD is down by $60 million on estimates, a reduction of 6.9%
"In the case of the net GST collected, this is even lower than that collected in the first two months of last year- by $10 million.
"GST and source deductions are the most current indicators of how the economy is going. They take the 'pulse' of the economy, whereas company tax receipts relate to preceeding years.
"I expect that GDP and other reports out this week will further confirm this slowdown, which is a remarkable reflection on the incompetant economic management by the Labour Government. I am aware of no other OECD country who's economy is contracting so significantly in a period of strong world-wide economic growth.
"The GDP results for the June quarter are due out on Friday, and may well show the economy shrinking by 0.5%. The National Bank's September Outlook is also due out Friday, and I'm expecting that to show a drop off in confidence.
"The tax receipts news paints a worrying picture, as this is fresh July and August data- and will have a big influence on projections for the September quarter GDP.
"The Prime Minister and Dr Cullen have ridiculed talk of a negative September quarter, but they will now be re-thinking that. They have underestimated how seriously the Government has damaged the economy.
"The confidence, or rather pessimism, indicators are translating into hard statistics. These will be more difficult to shrug off, and the Government will now be scrambling to re-position themselves and explain away the bad news,” said Rodney Hide.
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