KEY POINTS:
The Government's tax take has dipped sharply in the latest set of crown accounts - suggesting the economy is cooling faster than expected.
The crown accounts for the eight months to the end of February show an operating surplus of $1.43 billion, 70 per cent below forecast, but better than last month.
However, of concern to the Government will be a big drop in tax revenue - $700 million lower than forecast.
The January figure was just $100 million below forecast.
The February accounts are the last full set of accounts Finance Minister Michael Cullen will see before making key decisions on the contents of his May 22 Budget.
The latest revenue figures potentially give Dr Cullen less room to move on a planned three-year programme of rolling tax cuts, or other big ticket items.
The largest variance against forecast in the tax take was in GST, which was $400 million lower than expected.
But Inland Revenue Department officials said the GST figure, which is an estimate, might be influencedby a flow-on effect from January, which is a traditionally low month.
Treasury deputy secretary Peter Bushnell said he expected the negative GST variance to reverse over subsequent months.
He said the figure was not an error like that seen last month when IRD officials failed to account for $600 million in provisional tax, making the accounts appear far worse than they actually were.
Dr Cullen said at the time that the $700 million variance in the forecast tax take could impact on the later phases of his planned tax cuts.
But a spokesman for Dr Cullen said yesterday that the Government remained in a strong fiscal position.
"In terms of the overall picture going forward, there is no significant new information in the data that changes the picture outlined in the Treasury's December economic update and Budget Policy Statement."
Overall the February accounts were an improvement on last month's operating surplus of $198 million.
This month's operating balance excluding gains and losses (Obegal), which strips out unrealised investment gains, was a surplus of $4.15 billion, $405 million lower than forecast.
Net Government debt stood at $1.86 billion, which was $76 million higher than forecast, equating to 1.1 per cent of gross domestic product.
The Government's net cash position, the difference between all income and spending - operational and capital - was a surplus of $1.3 billion compared with a forecast of $1.39 billion.
The Treasury forecast an operating surplus of $7.39 billion for the fiscal year to June 30, 2008, in the Government's half-year economic and fiscal update in December.
The turmoil in financial markets resulting from the sub-prime mortgage problems has been reflected in a fall in the balance of the New Zealand Superannuation Fund, the Government's centralised fund to pay for future pension costs.
However, those losses are unrealised and have little effect on the Government's spending plans.
- NZPA, REUTERS
