Tax Revenues Remain Low
March 7, 2012 New Zealand Taxation
Tax collections in New Zealand have continue to be below the government’s own forecasts, with the total amount of revenues dropping by nearly a billion below expectations.
The government’s latest financial statements, released by the Treasury on March 6th, now show that the collection of every tax in New Zealand was below forecast during the seven month period ending January 31st 2012.
During the seven month period the Crown’s tax revenues were approximately 2.9 percent below forecast, reaching almost NZD 31.4 billion. Taking into account the current estimates for GDP growth, the government now expects the tax revenues for the 12 month ending June 2012 to reach NZD 55.5 billion.
In detailed period, collection of PAYE tax was approximately NZD 383 million below expectation, primarily due to slower than expected growth in the job market and continuously low levels of wage increases.
Collection of Goods and Service tax (GST) was down by NZD 345 million below the government’s own forecast. The drop was attributed to continue earthquake related payouts by insurance companies in the country.
Revenues from corporate income tax were also down, dropping NZD 245 million below forecast. According to the Treasury of New Zealand, collections of corporate income taxes will continue to remain low for several more months.
In a statement given by the Finance Minister Bill English in regards to the latest tax revenue results, he indicated that the local economy is still being negatively affected by the continued economic uncertainty amongst out major trading partners in Europe, and the results also reflect slower than expected economic growth in New Zealand.
Despite the drop in revenues, Finance Minister said that the deviation is not significant, and he remains positive that the government will reach its own goal of seeing a budget surplus by 2014. He explained that while the tax revenues were below forecast, the government also reduced its own spending by NZD 1.2 billion, offsetting the poor revenue results.
Photo by DMWyllie