NZ operating deficit wider than expected as GST, PAYE tax take misses forecasts
Dec. 5 (BusinessDesk) - The New Zealand government's operating deficit was wider than forecast in the first four months
of the financial year as the Crown clipped a smaller tax take on consumer spending and wages.
The operating balance before gains and losses (obegal) was a deficit of $2.87 billion in the four months ended Oct. 31,
$169 million, or 6.3 percent, bigger than forecast in the May Budget. Core tax revenue was 1.6 percent short of
expectations at $17.92 billion, with goods and services tax and source deductions from weak private consumption and
tepid wage growth the biggest drag on the accounts.
The tax take from GST accruals was 4.9 percent short of forecast at $8.13 billion in the four month period, while source
deductions missed expectations by 2.6 percent at $7.16 billion. Treasury officials said they expect the weakness in both
revenue streams to continue through the year.
The total corporate tax take was 1.5 percent below forecast at $2.41 billion due to a smaller return from non-resident
withholding tax.
Core Crown spending was 1.5 percent below forecast at $22.95 billion, with delays in health expenditure and less spent
on welfare for fewer beneficiaries.
The under-spends were offset by higher than forecast expenditure on earthquake expenses from land zoning decisions, and
the government has lifted its Christchurch 'red zone' provision by $234 million to $1.17 billion.
Including gains from the New Zealand Superannuation Fund and Accident Compensation Corp's investment portfolio, the
Crown's operating deficit was $34 million in the period, a 98 percent improvement on the forecast shortfall of $1.96
billion.
Net government debt was near expectations at $55.47 billion, or 27.1 percent of gross domestic product.
(BusinessDesk)