Sluggish tax-take widens NZ's operating deficit
Updated at 7:38 am on 9 May 2012
Effects of the sluggish economic recovery are continuing to weigh on the tax take, widening the Government's operating deficit.
Excluding unrealised investment gains or losses, the Treasury says the shortfall stood at $6.13 billion in the nine months to March, 15% below the forecasts in the pre-election fiscal update last October.
Core tax revenue came in 4% below expectations due to weaker income, GST and corporate tax take, though it's been offset by lower than expected Crown expenses due to delays in payments.
Treasury says while the economy has been weaker than expected, a stronger performance by some corporate taxpayers should trim the expected tax shortfall by around $400 million in the final quarter of the year.
Infometrics economist Benje Patterson believes that figure will be lower as he says cooling commodity prices and subdued construction and retail activity are weighing on growth.
Treasury officials also say the higher deficit reflects an extra $500 million in costs from another earthquake in Christchurch just before Christmas last year.
Net debt stood at 24.5% of gross domestic product.
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