Treasury reports OBEGAL Budget surplus of $222 mln for 3 mths to Sept 30, which is $725 mln more than forecast in May Budget; Revenues $523 mln higher than forecast on stronger economic growth

Treasury reports OBEGAL Budget surplus of $222 mln for 3 mths to Sept 30, which is $725 mln more than forecast in May Budget; Revenues $523 mln higher than forecast on stronger economic growth

By Bernard Hickey

The Government's surplus is growing fast as it moves into an election year, with stronger than expected economic growth boosting income tax and GST revenues.

Treasury reported a Budget operating balance before gains and losses (OBEGAL) surplus of NZ$222 million for the three months to September 30, which was NZ$725 million better than forecast in the May 26 Budget.

This was largely due to core Crown tax revenue being NZ$523 million or 3.1% more than forecast. Expenses were close to the May forecasts.

Treasury said the Government's residual cash deficit of NZ$810 million was NZ$1.4 billion smaller than expected, primarily reflecting higher than expected tax receipts of NZ$1.2 billion.

"This lower-than-forecast cash deficit, together with the lower than forecast opening net debt position ($0.4 billion), has flowed through to net debt which was $1.7 billion lower than forecast at $63.1 billion (25.1% of GDP)," Treasury said.

Corporate tax revenues were NZ $252 million or 11.8% above forecast.

"Most of the variance was caused by provisional tax being higher than forecast for both revenue and receipts, indicating that taxable profits for the current tax year may be higher than expected," Treasury said.

GST revenue was NZ$134 million or 3% above forecast. Treasury estimated GST arising from residential investment and inbound tourism was above forecast.

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bigger tax cut, yay.

time to spend more on health, huge waitng lists for eye operations.

yes if you want to boost the economy tax cuts for the bottom rung are the way to go, it will be spent rather than saved

Importantly if you read the Treasury information out today the favourable changes are based on estimates (Provision tax receipts - which are always estimates, and GST estimates from 30 June 2016), this from Treasury:

"Core Crown tax revenue for the three months to September 2016 was $523m (3.1%) above the 2016 BEFU forecast, mainly owing to corporate tax and GST being above forecast:

• Corporate tax revenue was $252m (11.8%) above forecast. Most of the variance was caused by provisional tax being higher than forecast for both revenue and receipts, indicating that taxable profits for the current tax year may be higher than expected.

• GST revenue was $134m (3.0%) above forecast. Based on GDP outturns to June and Treasury estimates for the September quarter, GST arising from residential investment and inbound tourism was above forecast."

Putting aside that 'residential investment' GST upturn is not that healthy for the economy in reality, we have to be a little careful about these monthly releases in the run up to an election, especially if an early election is called next year before these results are audited on 30 September 2017!

Also would be good to know if Gross Debt is still rising and if so by how much...

The announced 0.3% unemployment drop would have contributed over $100 million/year

No mention of the inevitable losses suffered by ACC and NZ Super fund due to Trump induced sharemarket falls??

If they do not spend and cut in health, education, housing and all social sector with a single goal of profit, forgetting that the role of government is different that from businessmen and speculators.

Governments are supposed to tax as little as possible while still providing, free healthcare, free education, national defense & law & order.
If they remember the role of Government they could cut our taxes substantially.

Don't forget that there is no free lunches. You only get what you pay for.