More tax, less spending gives deficit rosier glow

Photo / Thinkstock

With two months of the Government's financial year to run the deficit stood at $5.9 billion - $1.4 billion less than forecast in the Budget two weeks ago.

The Budget's economic and tax forecasts were closed off at the end of April. The actual revenue and spending out-turns for the 10 months to April 30 were released yesterday.

Corporate tax revenue turned out to be $452 million, or 1.7 per cent, above the Budget forecast, in part because of better-than-expected growth in KiwiSaver funds, and GST was $313 million (2.7 per cent) above forecast.

Spending was $323 million or 0.6 per cent below forecast, but largely for reasons the Treasury expects to unwind by the year's end.

The fiscal bottom line was also boosted by about $300 million in better-than-expected results from state-owned enterprises and Crown entities.

Compared with the same period in the previous fiscal year the tax take was $2.7 billion, or 6.5 per cent, higher while core Crown expenditure was essentially flat - $155 million or 0.3 per cent lower.

That is despite an increase of $477 million in finance costs.

The higher interest bill reflects a $10.5 billion or 25 per cent increase in the Government's net debt levels.

There was a turnaround of nearly $2 billion in the contributions from SOEs and Crown entities, largely reflecting the impact of the February 2011 disaster on the Earthquake Commission in the prior year.

Since the Treasury finalised its Budget economic forecasts the Greek debt crisis has become more grave and international sentiment has accordingly worsened.