Falling tax revenue could start to hurt the Government's account in the present financial year as Finance Minister Bill English prepares his 2012 Budget.
Treasury figures released yesterday came with a warning that tax revenue for the five months ended November was down 2.3% on forecast to $21.4 billion.
In the same five months, the operating balance before gains and losses (Obegal) deficit was $4.48 billion, $252 million (6%) higher than forecast. This was due primarily to lower-than-forecast tax revenue which was $498 million lower.
Source deductions were $394 million (4.4%) below forecast, GST revenue was $309 million (5.1%) below forecast and corporate tax was $210 million (7.1%) above forecast.
Treasury said the source deductions and GST revenue variances were mainly timing-related and were expected to reverse.
However, there was a risk that some of the GST variance would not reverse by the end of the year.
While corporate tax revenue was above forecast, which appeared to be due to a higher-than-expected corporate profitability, lower third-quarter GDP compared with the pre-election forecast suggested corporate profitability might be lower than forecast by the end of the year.
Mr English said the lower tax revenue reinforced the need for ongoing spending restraint and responsible fiscal management.
Echoing the statements made by Prime Minister John Key on Thursday, Mr English said the Government was committed to returning to surplus in 2014-15.
"Returning to surplus and repaying debt are among the most important things the Government can do to ensure New Zealand can withstand future shocks and build a more competitive economy based on exports and new jobs."
Costs from the latest Canterbury earthquake on December 23 would be included in the Crown accounts when the Earthquake Commission had measured the financial impact.
The Budget Policy Statement, to be issued on February 16, would confirm the Government was on track for a surplus in 2014-15, he said.
But instead of a surplus of about $1.5 billion, it would be about $300 million to $500 million.
The Budget will be released in May but the Government's financial year ends in June.
