21 Feb 2014

Surplus hopes hit by lower tax take

11:09 pm on 21 February 2014

The Finance Minister has conceded getting the Government's books back into surplus has become more difficult with the latest financial statements showing the tax take lower than forecast.

In the six months to the end of December, the Government recorded a deficit, excluding investment gains and losses, of $1.8 billion.

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Finance minister Bill English appearing at the Finance and Expenditure Select Committee meeting. Photo: RNZ

The deficit is $380 million worse than forecast, mainly because of the lower tax income.

The minister Bill English says it does raise some doubt about whether the Government can get back to surplus in 2014-15.

Mr English says the numbers don't quite match up with other statistics showing the economy is growing.

But he says it's possible companies are carrying through losses from previous years, which have helped reduce their tax payments this year.

The Treasury says it is baffled by the tax take being lower than it forecast in its half year economic and fiscal update in December.

It says it is difficult to determine if the lower-than-forecast tax is permanent, or whether the tax take will pick up in the last few months of the financial year.

If it is permanent and flows into the next financial year that's likely to undermine the Government's promise of getting its books back into surplus in 2014-15.

The lower tax take also meant net public debt at the end of December was $392 million higher than forecast.