27 Jan 2012

Lower tax revenue hits Government books

4:32 pm on 27 January 2012

The Government's books are slightly worse off than projected, mainly because of lower tax revenue.

The operating deficit for the first five months of the financial year was $4.48 billion, which was $252 million (6%) higher than predicted.

Revenue from income tax was 4.4% lower than forecast and and GST revenue was 5.1% lower.

While more corporate tax was collected than expected, the Treasury is warning that corporate profitability for the remainder of the financial year may be lower than forecast.

Corporate tax was $210 million (7.1%) above forecast.

Finance Minister Bill English says the latest Crown account figures reinforce the need for ongoing spending restraint.

The Government still expects to return to the books to surpus in 2014-15 but Prime Minister John Key said on Thursday the surplus is forecast to be $300 -$500 million rather than the $1.45 billion estimated in the Treasury pre-election fiscal update.