24 Jan 2014

Lower tax take pushes up deficit

7:05 pm on 24 January 2014

The Government's push to get its books back into surplus has run into a blip, with its tax take in the first five months of this financial year falling short of expectations.

But the Treasury says it believes it is simply a matter of timing and tax income will increase during the rest of the year.

The $2.335 billion operating deficit - which excludes gains and losses on the Government's investments - was $402 million worse than forecast in the December economic and fiscal update. Tax income was $514 million below the forecast.

If investment gains from Government entities, such as ACC and the New Zealand Superannuation Fund, are included the finances look in much better shape.

Prime Minister John Key says the operating balance, once investment gains from ACC and New Zealand Super are included, recorded a surplus of $2.25 billion - well above the Treasury forecast.

Mr Key says people should not get excited by the latest figures and the fact the tax take is lower than expected. He says the numbers move around and the Treasury expects tax income to rise in the later part of the financial year.

The November financial statements also estimate the loss to the Government of the sale of shares in Meridian Energy and Air New Zealand, taking into account the reduced value of its investments, was $358 million.

The Labour Party's finance spokesperson, David Parker, says the fact the Government's tax take is down shows businesses aren't making as much money as expected.