The government tax take took a further dive in the nine months to March as the recession worked its way though the economy.
Core Crown revenue was $530 million lower than forecast but even this figure was boosted by one-off gains from Inland Revenue's su
The government tax take took a further dive in the nine months to March as the recession worked its way though the economy.
Core Crown revenue was $530 million lower than forecast but even this figure was boosted by one-off gains from Inland Revenue’s successful actions against the banks’ structured finance transactions, along with the reassessment by the IRD of some non-resident withholding tax liabilities.
Without those, the figure would have been $930 million.
Company tax was in line with forecast – but, again, this was boosted by the banking tax win – when that is taken out revenue is $349 million below forecast.
Provisional tax payments were down $309 million and this, says the Treasury, is expected to remain below forecasts for the rest of the financial year.
PAYE deductions were down $537 million on forecasts – and this, too, is expected to remain low for the rest of fiscal 2010.
The anomaly is GST revenue, which is $314 million above forecast. This seems to reflect a pick-up in consumer confidence in March and the Treasury notes that the result tends to “support our view that private consumption is likely to be above forecast in both the December and March quarters.”
Although tax revenue was down, spending fell further, meaning the operating deficit – excluding gains and losses from Crown Financial Institutions – is $5.3 billion instead of the $5.8 billion forecast in December.
The main reasons for the drop are timing postponements of Treaty of Waitangi settlements, which have been pushed into the next financial year.
This shaved $385 million off the expected outgoings for the period. There were also forecasting errors of $116 million.
The rest of the fall off in spending – $308 million – is due to small variances across a number of government departments.
‘It now looks as if these variances will result in a level of underspending at the end of the year and this has been factored into the 2010 budget economic and fiscal update forecasts due for release on 20 May,” says Treasury deputy secretary Colin Lynch.
