Just a month before Finance Minister Bill English delivers his sixth Budget, the latest financial statements have confirmed that the Government's tax take is lower than expected.
In the eight months to the end of February, the tax take was $1.1 billion lower than forecast, helping push the deficit for this year higher, figures released on Tuesday show.
Mr English has warned that is making it tougher for the Government to get its finances into surplus in the next financial year.
"As we've indicated for the last few months, it's making this Budget a bit tighter. We want to get to surplus because it's important we move towards paying down debt. The fact that tax revenue's lower than expected makes that job just a bit tighter."
Mr English said it is too early to tell whether the Government will have to cut back on its forecast new spending of $1 billion in order to ensure the books get back to surplus.
Labour Party finance spokesperson David Parker said the latest financial statements confirm that not everyone is doing well from the economic recovery.
"The so-called rock star economy obviously isn't delivering increases in wages for people, otherwise PAYE and GST would be on track and the tax take of the Government would be better than what it is. In fact, once again the Government is behind on its own forecasts."
But Mr Parker said the Government should still get its books back to surplus in the next financial year.
The Treasury says nearly half the $1.1 billion shortfall in the tax take is probably due to timing issues.
In the seven months to the end of January there was a $876 million shortfall and at that point, the Treasury was saying it couldn't determine how much was temporary. It expects tax revenue in the year beginning July will increase as a result of accelerating economic growth and should be in line with its forecasts published in December last year.
New Zealand First leader Winston Peters is not impressed with the latest financial statements and says that raises questions about the state of the economy.
"A billion dollars down tells you that the so-called rock star economy is not what they claim it to be. It would not be down if it was what they claim it to be and, as a consequence, Treasury has tried to rear gear its projections to say they'll get it back. They won't, of course. These are annualised events, their forecasts are wrong for the umpteenth time."
Mr Peters said the Government can still get into surplus next financial year by deferring spending - but it will be and extremely thin surplus.