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Lower Tax Revenues Widen New Zealand Deficit

by Mary Swire, Tax-news.com, Hong Kong

16 November 2011


Lower than expected tax receipts have led to a larger deficit than projected by the New Zealand government. However, according to Finance Minister Bill English, the government remains committed to sound management of its finances and returning to surplus in 2014/15 as the economy continues to grow.

He was speaking on the release of the latest government finances which show that government spending and net debt were all slightly lower than expected for the three months to September 30.

The lower than forecast tax revenue contributed to a slightly larger than expected operating deficit of NZD2.48bn (USD1.9bn) for the period in question. English added that while the deficit is on track toward the forecast of NZD10.8bn for the current financial year, the figure is still too high for comfort, especially in the face of ongoing global economic uncertainty.

English stressed that the government is focused on returning to surplus and ensuring the net debt is below 30% of GDP. He predicts the deficit will fall by half to NZD4.4bn next year.

English concluded: “Getting there won't be easy. In many ways restraint in the public sector has only just started and getting back to surplus will require ongoing spending discipline for many years. The government is committed to meeting this challenge. We've taken steps to control spending and get on top of debt, while putting in place policies that build a more competitive economy and more real jobs."

TAGS: tax | economics | fiscal policy | gross domestic product (GDP) | New Zealand | revenue statistics

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