Budget surplus 'still likely'

WELLINGTON - The Government says it is still on track for a budget surplus in the year to June 1999 despite lower than expected tax revenues.

Figures for the eight months to February 28 showed a $1.098 billion operating budget surplus in the period, just $79 million ahead of forecast.

In the seven months to January the $1.236 billion surplus had been $522 million ahead of forecast.

The Government officially forecasts a small deficit for the full year of $52 million, but has been signalling for some time a surplus is likely. The Treasury said a surplus was still expected, as underlying strength continued in goods and services tax receipts and resident withholding tax.

In the eight months to February, revenue totalled $23.28 billion and expenses totalled $22.93 billion with earnings from state-owed businesses contributing $745 million.

The overall tax revenue was $51 million, or 0.2 per cent lower than forecast, while the Government spent $211 million less than it had forecast.

While still ahead of forecast, the overall surplus was affected by a switch in terminal tax and ACC payment dates for many taxpayers to April 7 from February 7.

Tax revenue was $309 million below forecast for the month, while ACC's surplus was $256 million below forecast.

"These variances are expected to reverse out by the end of the financial year [June 30]," said the Treasury.

"A full year surplus is still expected and is likely to be somewhat higher than the small deficit forecast in the December Economic and Fiscal Update. - NZPA