Sharechat Logo

NZ govt 1H operating deficit in line with forecasts, Treasury warns on corporate tax

Monday 20th February 2012

Text too small?

The New Zealand government’s first-half operating deficit was in line with expectations, though the Treasury warned the corporate tax take may taper off through the second half of the year.

The operating balance before gains and losses (OBEGAL) was a deficit of $4.09 billion in the six months ended Dec. 31, just $3 million wider than the pre-election fiscal and economic update forecast (PREFU).

Core crown tax revenue was $400 million short of expectations at $26.4 billion, with source deductions and goods and services tax below forecast. Total corporate tax accrued of $3.7 billion was in line with forecasts, having beaten expectations in recent months.

“Data on provisional tax assessments received during the month of December, together with slightly weaker-than-expected growth in GDP in the September quarter, indicates that corporate profits may be weaker for the full financial year,” chief financial officer Fergus Welsh said in a statement.

Last week, the Treasury downgraded the forecast tax take to $28.7 billion for the 2012 financial in the budget policy statement, and flagged an OBEGAL deficit of $12.08 billion, wider than the $10.81 billion shortfall projected in the PREFU.

The global deterioration originating out of Europe raised red flags for the government department, and while that poses a heightened risk to the country’s economy, things aren’t yet a worst-case scenario.

The operating deficit was $2.6 billion wider than expected $9.47 billion in the six-month period, with larger actuarial losses in the Government Superannuation Fund and Accident Compensation Corporation’s outstanding claims liability.

Finance Minister Bill English said lower government spending helped offset the fall in revenue, and the Crown must stay disciplined to meet its target $370 million surplus in the 2014/15 year.

“That is why we have made it one of our four main priorities, alongside building a more productive and competitive economy, delivering better public services and rebuilding Canterbury,” English said. “The economic update in the budget policy statement last week shows growth will be slightly lower in the near term due to a weaker global outlook.”

The government’s net debt was $50.13 billion, or 24.7 percent of GDP, $499 million below forecast.

BusinessDesk.co.nz



  General Finance Advertising    

Comments from our readers

No comments yet

Add your comment:
Your name:
Your email:
Not displayed to the public
Comment:
Comments to Sharechat go through an approval process. Comments which are defamatory, abusive or in some way deemed inappropriate will not be approved. It is allowable to use some form of non-de-plume for your name, however we recommend real email addresses are used. Comments from free email addresses such as Gmail, Yahoo, Hotmail, etc may not be approved.

Related News:

SML - Synlait Milk Limited - Trading Halt of Securities
AIA - Auckland Airport announces board chair changes
AIA - Auckland Airport announces board chair changes
CEN - Tauhara commissioning progress update
FPH initiates voluntary limited recall
March 28th Morning Report
KFL Celebrates 20 Years of Excellence in Investment Mgmt.
SVR - Savor FY24 Earnings Guidance & Change in Banking Partner
NZK - NZ King Salmon Investments Limited FY24 Results
March 27th Morning Report