High tax take cushions deficit

22:56, Jul 05 2012

Higher than expected tax revenue helped keep the Government's deficit below forecast but it remains high at $5.9 billion.

Treasury today released Government financial statements for the 11 months ended 31 May 2012.

They reveal an operating balance before gains and losses (OBEGAL) deficit of $5.9b, 16 per cent lower than forecast.

While OBEGAL deficit was below forecast, actuarial losses on ACC insurance liabilities were $1.7b higher than expected.

Once included the operating balance deficit blew out to $10.9b, $820m higher than forecast.

Finance Minister Bill English said the accounts were "encouraging" but the global environment remained uncertain.

"This month's accounts continue to be better than forecast, due to ongoing spending discipline and better than expected GST and corporate results."

But revenue was still $835m below the pre-election forecast made in October.

English said the Government would continue to keep a firm control on its expenses and manage its finances responsibly.

"Balancing the books and returning to surplus is one of the most important things the Government can do."

Maintaining a firm control will help the Government remain on track for surplus in 2014/15, he said.

Core Crown revenue was $667m, 1.3 per cent higher than expected largely thanks to higher corporate tax ($389m) and GST ($192m).

"The difference in corporate tax continues to relate to terminal tax assessments and Portfolio Investment Entity (PIE) tax both being approximately $200 million higher than Budget estimates," Treasury said.

Core Crown expenditure was almost on forecast at $62b.

As at May 31, net debt was $49.6b, or 24.6 per cent of GDP and gross debt was $79.7b, or 39.5 per cent of GDP.