6 Jul 2011

Govt operating deficit smaller than expected

2:44 pm on 6 July 2011

A higher tax take and lower expenses have helped the Government's books, with a smaller than expected operating deficit announced on Wednesday.

Excluding unrealised investment gains and losses, figures from the Treasury show an operating deficit of $10.8 billion for the 11 months to the end of May, 11% less than forecast in the Budget.

The Treasury says that is largely due to a rise in tax revenue, with higher GST receipts offsetting a lower corporate tax take.

Crown expenses also came in below forecast, as departments have cut costs.

The Government had tipped an record annual operating deficit of $16.7 billion for the year to June.

But assuming the Government's share of the Canterbury earthquake costs is close to forecast, the Treasury says that figure will be nearer $16 billion.