Higher taxes and lower expenses lead to bigger Govt surplus

Higher than expected tax revenue and lower Crown expenses saw the Government's operating surplus for the four months to October 31 beat forecasts by $739 million.

Crown Financial Statements released today showed the operating surplus was $2.525 billion against a forecast of $1.786 billion.

Tax revenue beat forecasts by $433 million at $14.774 billion. Tax revenue was boosted by higher than expected companies tax, which beat the forecast by $123 million. Also contributing was net GST, up $108 million on the forecast due to higher than expected consumption.

Core Crown expenses were $204 million below forecast at $14.279 billion. The lower expenses mainly reflected delays in implementing new initiatives. Health expenses fell $103 million below forecast, due to timing delays in implementing Ministry of Health programmes.

Social security and welfare expenses were $92 million below forecast, mainly due to delays in family support debt provisioning, but unemployment benefit expenses also contributed, reflecting the low unemployment rate.

Net Crown debt was $594 million below forecast at $14.147 billion, or 10.1 per cent of gross domestic product (GDP), against a forecast of 10.5 per cent.

Total revenue for the period was $20.889 billion, $110 million above forecast.

The forecasts were based on the 2004 Budget Economic and Fiscal Update.

- NZPA