NZ Tax Revenues Continue to Slide
December 6, 2010 New Zealand Taxation
The Treasury has announced that tax revenues in the last four months were once again below expectations, primarily due to underwhelming GST and corporate income tax collections.
On December 6th the New Zealand Treasury released the latest Financial Statements of the Government of New Zealand, detailing the country’s fiscal position for the four month ending October 31st. According to the documents, tax revenues for the last four months were 6.3 percent below forecasts, equating to a monetary shortfall of NZD 1.1 billion.
In a statement accompanying the release, Deputy Secretary to the Treasury Colin Lynch attributed the below-expectations results to shortcomings in GST and corporate income tax revenues. He stated that GST revenues fell by NZD 190 million, equivalent to 4.2 percent below expectations. Colin Lynch explained that households are showing an unexpected amount spending restraint in recent months. Corporate income tax revenues fell by 28 percent, only reaching a level of NZD 784 million.
The Government’s operating balance before gains and losses also dropped by NZD 1.9 billion to a deficit of NZD 4.4 billion, due to the lowered tax take and the on-off costs associated with the recent earthquake in Christchurch. However, some gains were made by the New Zealand Superannuation Fund, leading to a operating balance deficit of only NZD 450 million.
The Finance Minister Bill English has revealed that the latest results are prompting the government to take further action regarding the deficit. He revealed that in early 2011 a new investigation will be held into how the Government’s expenses can be cut, and what aspects of public spending can be lowered while still retaining mandatory services.
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