Tax revenues in New Zealand have dropped below the government’s expectations, but the decrease has been offset by a number of economic policies aimed reducing government spending.

On February 20st the Treasury of New Zealand released the latest Financial Statements of the Government of New Zealand, showing that tax revenues collected in the country dropped below forecast over the six months ending 31st December 2011. According to the Treasury, the cumulative tax revenue for the time period was 1.4 percent below the forecasts released in the 2011 Pre-election Economic and Fiscal Update (PREFU), and totaled nearly NZD 26.4 billion. However, the revenues were also approximately 2.9 percent higher than in the same period in 2010.

Despite the lower than expected revenues, the government’s operating balance before gains and losses was only NZD 3 million below forecast, due to the government’s own measures implemented to significantly reduce spending. According to the Treasury, the government’s expenses over the six months were NZD 887 million below forecast.

The government currently forecasts that the total tax revenues for the 12 months ending June 2012 will be approximately NZD 55.5 billion. According to the Treasury, the government should see an increase in the collections of PAYE and GST, as revenues from both taxes have recently been lower due to abnormal seasonal effects.

Commenting on the government’s reduced spending levels the Finance Minister of New Zealand Bill English said that “…balancing the books and returning to surplus is one of the most important things the Government can do to rebalance our economy towards savings and exports.”

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