The Government is using a tax windfall to put an extra $500 million into improving the transport network, Finance Minister Michael Cullen said today.
Dr Cullen said latest data showed the tax take for the 11 months to the end of May was running $544 million ahead of forecasts.
"Corporate
tax was the main driver of the above-forecast tax take, accounting for $368 million of the $544 million variance," he said in a statement.
"A significant proportion of it is due to some large, unexpected payments from the financial sector relating to previous tax years."
Dr Cullen said that because the extra revenue was likely to be one-off rather than ongoing, it was sensible to use it to fund initiatives which were also one-off.
"Accordingly, the Government will invest an additional $500 million in improving the transport network and wiping out a legacy of persistent under-investment in the tax-cutting, expenditure-cutting 1990s."
Dr Cullen said the increase was on top of the extra $100 million a year for the three years from 2006-07 announced in the May budget, and demonstrated the Government's commitment to building the infrastructure needed to support strong economic growth.
His only explanation of the "large unexpected payments from the financial sector" was that the financial industry was responding to new tax law.
The Government recently passed legislation forcing foreign-owned banks to pay significantly more tax than they have in the past.
A spokeswoman for Dr Cullen said there were constraints on discussing corporate tax affairs.
National's finance spokesman, John Key, said he was pleased Dr Cullen had ``executed a U-turn on road funding'' but he suspected it had more to do with Labour's poor polling.
``It's certainly a convenient way for Michael Cullen to disguise the fact that he's bungled the numbers again and collected a lot more tax than he was expecting,'' Mr Key said.
- NZPA
