Tax brings higher-than-forecast surplus

The Government operating surplus for the 11 months to May was $7.46 billion - $675 million ahead of the forecast in the May 19 Budget.

The Treasury said yesterday the higher-than-forecast surplus was due to:

* Higher-than-forecast tax revenue of $544 million largely due to corporate tax ($368 million), net "other persons" ($93 million) and source deductions ($61 million). Corporate taxes were ahead of forecast largely due to higher-than-expected terminal tax assessments being lodged in May.

* Investment income being higher than forecast by $79 million, reflecting investment gains by the Government Superannuation Fund, NZ Superannuation Fund, Earthquake Commission and ACC, on their financial assets portfolios due to movements in global asset markets.

* Expenses being $52 million lower than forecast due to two offsetting factors - $330 million of core Crown expenditure delays in health ($116 million), economic and industrial services ($90 million), education ($50 million) and other ($74 million), and recognition of a $307 million estimated Kyoto liability.

The operating surplus before operating balance excluding revaluations and accounting changes (Oberac) was $7.4 billion, which was $79 million lower than the operating balance but $596 million above forecast, reflecting the removal of investment gains on the investment asset portfolios held by the Government Superannuation Fund, NZ Super Fund, the Earthquake Commission and ACC.

Net cashflow from core operating and investing activity was $3.3 billion - $708 million higher than forecast

Gross government debt was $35.4 billion (24.2 per cent of GDP), at the same level as the revised budget forecast. Net debt was $11.2 billion, which was around $700 million lower-than-forecast, reflecting higher than forecast tax receipts and delays in purchases of physical assets.

- NZPA