7 Mar 2017

Govt surplus surges as tax take rises

11:00 am on 7 March 2017

The government has recorded a stronger surplus thanks to a higher tax take and lower spending.

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Photo: 123rf

Excluding investment gains and losses, the operating surplus stood at $1,145 million for the seven months to January, compared with the $442m surplus that had been forecast.

The growing economy boosted tax revenue, which came in above expectations at $42.4bn.

The Treasury said the improvement was led by a higher corporate tax take due to rising profits. That more than offset lower than expected GST.

The department said economic indicators pointed to below-forecast growth in domestic consumption and residential investment in the December quarter.

Expenses came in below expectations, down 0.8 percent to $44.2bn.

The Treasury said most of the $338m difference was due to uncertainty over the costs of the Kaikoura earthquakes, which had yet to be included in the actual results.

Kaikoura repairs are estimated to cost between $2bn and $3bn.

The government added $1bn in quake-related expenses to its forecasts, with $685m of that due to EQC claims costs, and the remaining $315m attributable to other things, such as funding local infrastructure.

Treasury is forecasting a $473m surplus in the June 2017 year.

If investment gains and losses are included, the operating surplus is a larger than expected $7,827bn. That was mainly due to an actuarial gain of $3.3bn on the ACC liability, the Treasury said.

Net debt totaled $61.7bn, or 24.1 percent of the value of the economy.