Govt deficit widens as tax take falls

The Government's operating deficit has widened more than forecast after tax revenue fell 2.1 per cent below forecast. Photo / Mark Mitchell
The Government's operating deficit has widened more than forecast after tax revenue fell 2.1 per cent below forecast. Photo / Mark Mitchell

The New Zealand government's operating deficit was wider than forecast in the first quarter of the financial year as the Crown took in less tax than expected in a subdued economy.

The operating balance before gains and losses (obegal) was a deficit of $2.1 billion in the three months ended Sept. 30, $449 million, or 27 per cent bigger than forecast. Core Crown tax revenue was $13.5 billion, or 2.1 per cent lower than expected, the Treasury said.

Source deductions and goods and services tax were $166 million apiece below forecast, reflecting lower-than-expected wage growth and private consumption, it said. Provisional tax was $103 million below forecast.

Core Crown spending was 1.1 per cent below forecast at $17.3 billion, with under-spending on welfare, education and finance costs. These were offset by higher-than-expected earthquake expenses.

The operating balance including gains and losses was a surplus of almost $100 million, or $1.2 billion better than expected, reflecting gains from the NZ Superannuation Fund and the Accident Compensation Corp's investment portfolios.

Gross debt amounted to $79.3 billion, or 38.8 per cent of gross domestic product. Net debt was $54.9 billion, or 26.9 per cent of GDP.

- BusinessDesk

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