The surplus is nearly $1billion higher than the Treasury December 8 forecasts of a $498million surplus.
Core Crown tax revenue was $462million, or 1%, higher than forecast for the eight months ended February 28. Corporate tax was the largest driver of the favourable result as revenue was $551 million ahead of forecast.
A Government Accountant Office spokeswoman said the increase was across both provisional and terminal tax, indicating profits in the 2016 tax year were higher than forecast and that had continued into the 2017 year. The favourable result was partially offset by source deductions revenue being $147million (0.8%) lower than forecast. The seasonal dip in February’s deductions was larger than forecast but was mainly timing related and should reverse out in coming months, the spokeswoman said.
Increasing fuel and tobacco tax added about $90 million to the Government’s coffers in the period. Tobacco excise tax was above forecast owing to higher than expected importation or production of tobacco products.
Crowe Horwath Australasian tax managing partner Scott Mason told the Otago Daily Times some sectors of the economy were enjoying growth in profitability — particularly in construction and tourism — resulting in growing tax payments as compared to years before 2016.
"Agriculture is more dependent on what sub-sector the taxpayer is in. Locally, we have witnessed this plus a steady growth in the local tech sector, underpinning strong job growth in Dunedin and across Otago.
"Listening to my clients, there is a degree of confidence that supports the current positive decision-making such as employing more people, acquiring plant or building new premises."
However, Mr Mason believed the trend was partly underpinned by both the current position in the overall property cycle and an assumption of continuity of current political regime.
Both of these drivers of confidence could be undermined, he said.
Finance Minister Steven Joyce said tax revenue from the last year was 3.8% ahead of Budget 2016 expectations and 7.7% ahead of the same period last year.
The Government had collected $3.5billion more in tax in the first eight months of the year compared with last year.
"That’s one of the dividends the country obtains from a consistently growing economy responding to a strong economic plan."
Core Crown expenses were $395million below forecast. While expenses would continue to move around, it was good to see the trend of growing tax revenue continue as he headed into Budget 2017 next month, Mr Joyce said.
He was also pleased to see the Government making progress on its debt target. Net debt was now at 23.5% of GDP. Reducing net debt to about 20% of GDP by 2020-21 would improve the resilience of the New Zealand economy to future shocks.
However, Act New Zealand leader David Seymour took issue with Mr Joyce’s reading of the current financial situation.
"Steven Joyce has today boasted of taking a $3.5billion more tax in the first eight months of this year compared to last.
"He then has the cheek to describe this as a ‘dividend’ for the country. Since when was a tax bill a dividend?"
A Government surplus was a taxpayer deficit. The Government was taking more tax than it needed, and it would probably be more appropriate for Mr Joyce to apologise than to boast, Mr Seymour said.
Act would remind National that tax belonged to the taxpayer, ensuring surpluses were returned to the people who earned the money in the first place.
The Crown accounts showed the operating balance excluding gains and losses (obegal), the preferred government measure of finances, of $1.41billion was more than $1billion ahead of the same time last year when the surplus was $398million.
The operating balance, which includes the gains and losses from Government investments through New Zealand Superannuation Fund, the Government Superannuation Fund and ACC, was $15billion ahead of last year’s $5billion deficit, with a $10.6billion surplus.
At a glance
• Surplus nearly $1 billion ahead of forecast
• Tax revenue up across all sectors
• Corporate tax indicates businesses doing well
• Act NZ leader accuses Government of keeping too much tax
