Provisional tax assessments and end-of-year financial positions currently being undertaken could hurt what might otherwise be seen as positive news for the Government, WHK tax manager Scott Mason says.
The Government accounts released yesterday showed core crown tax revenue was up 1.7% in the 10 months to April compared with the Budget Economic and Fiscal Update.
Corporate tax was $452 million, or 7%, above forecast, with 2011 terminal tax assessments and portfolio investment entity (PIE) tax each about $200 million above forecast, the Treasury figures showed.
GST was $313 million, or 2.7%, above forecast, mainly as a result of smaller-than-expected GST refunds.
The year-on-year figures showed a much better picture for the Government, with tax revenue in the period ending April up 6.5% to $45.1 billion on the previous corresponding period.
Mr Mason said businesses paid provisional tax three times a year and the assessments being undertaken now showed some of them had paid too much and could expect a refund.
He also believed Finance Minister Bill English was hearing anecdotal evidence the last quarter had not been as strong for New Zealand corporates and would be adopting a conservative line about Government spending.
"Our view is that the productive sector is not going as strongly as it was two months ago and that is a reaction to Europe.
"Just as things were coming right, Greece reared its head again.
"We are seeing profit downgrades coming through and the performance of the NZX recently has not been strong.
"With the business confidence cycle down, the business-to-business spend is drying up."
Mr Mason stressed he was not negative about the future but he believed people had become too optimistic too early. Growth would be slower than expected.
The Treasury accounts showed the Crown's expenditure of $56.1 billion was $323 million lower than forecast.
The operating balance excluding gains and losses (obegal) deficit for the 10 months to April was $1.4 billion, or 19.2%, lower than forecast at $5.9 billion, largely as a result of the higher tax and lower expenditure.
Better-than-expected results across state-owned enterprises and Crown entities contributed about $300 million to the lower deficit.
Mr English acknowledged the better position the Crown found itself in but said, in the past year, there had been fluctuations in the tax take from month to month.
"While this month's tax take had been boosted by better-than-expected GST and corporate results, revenue was still about $900 million below forecasts in the Treasury's pre-election update last October.
"These fluctuations in revenue reinforce the need for the Government to keep a firm control on its costs so it can stay on track to surplus in 2014-15."
