This is the first month that monthly actual results are compared against the BEFU 2021
forecasts, the March 2021 actual results were compared against 2020 Half Year Economic
and Fiscal Update (HYEFU 2020), Treasury said.
The "positive variances" reflected economic conditions being better than forecast, Treasury said.
"Corporate tax was above forecast primarily owing to higher investment income and consequently higher PIE tax. Other direct taxes were above forecast as a result of stronger resident withholding tax on dividends."
Labour market conditions were better than forecast which had driven the positive variance in source deductions and consumption was also stronger, leading to GST revenue being higher compared to forecast.
Some media commentators have suggested that Treasury was overly optimistic in its Budget outlook.
In fact, Treasury forecasts for GDP growth are now more conservative than most market economists.
Yesterday, Singapore-based Fitch Solutions revised up its outlook for the New Zealand dollar on the strength of the post-Covid recovery.
It now sees New Zealand's economy growing at 3.6 per cent for 2021 compared to the Treasury forecast for 2.9 per cent.
"The strength of the NZ dollar is closely linked to the country's investment outlook, which has brightened in recent months on the back of the country's effective virus containment and economic rebound," Fitch Solutions economists said in a new report.
"We expect this trend to persist as economic activities continue to normalise, and this will support investor optimism, boosting financial inflows and drive the NZD stronger."
After the Budget, S&P Global Ratings said that "New Zealand's 2021-2022 Budget Economic and Fiscal Update confirmed it is recovering quicker than most advanced economies".