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Poor Revenue Performance Hits NZ Budget Projections

by Mary Swire, Tax-News,com, Hong Kong

10 December 2012


Lower than expected tax revenue in the four months to the end of October helped drive the New Zealand deficit above its projected level, new figures show.

According to Finance Minister Bill English, the drop in revenue reflected weaker-than-forecast consumption and wage growth. These trends then impacted on the goods and service tax (GST) and pay-as-you-earn (PAYE) revenue streams.

The government's operating deficit before gains and losses stood at NZD2.87bn (USD2.4bn) in the four months to October 31. This was NZD169m higher than the figure forecast in Budget 2012.

However, English is pleased with the progress made by New Zealand's Inland Revenue Department (IRD) in pursuing tighter collection and enforcement policies. In particular, this has resulted "in higher effective tax rates for non-incorporated businesses," he said.

English will issue a new set of forecasts with his Half-Year Economic and Fiscal Update on December 18. The forecasts will take into account the Treasury's latest assessment of the global economic situation and its likely impact on New Zealand.

TAGS: tax | business | fiscal policy | enforcement | tax authority | New Zealand | revenue statistics

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