The Government seems increasingly unlikely to meet its end-of-year tax forecasts as it faces the double whammy of weak employment and wage growth and more people receiving benefits.
Finance Minister Bill English has already indicated that his May 24 Budget 2012 will be zero, or close to zero, as he focuses on trimming back expenditure.
As Mr English and Prime Minister John Key faced questions from Opposition parties in Parliament on the Government's tax policy, the Treasury forecasts were left untouched.
Labour finance spokesman David Parker said that at the same time the Government was announcing more red ink in the crown accounts, National Party MPs were block-voting to stop the Treasury being called in front of the finance and expenditure committee.
"The committee has been blocked from following up with Treasury its mishandling of the Crown guarantee of finance companies, despite the Auditor-general's findings showing it needed scrutiny," he said.
Through several election cycles, the Treasury forecasts have over- or underestimated the impact of global economic events on the local economy.
Now, Mr Parker says advice to the finance and expenditure committee last week showed that during the first five months of the guarantee scheme, Treasury did not monitor whether finance companies were engaging in more risky lending on the back of the Crown guarantee.
"Mismanagement of Government finances totalling hundreds of millions of dollars should be looked into. It is one of the reasons why the latest Crown accounts are so poor. This is more than nonchalance from Treasury. It is costly mismanagement," Mr Parker said.
In the eight months to February 29, the Treasury forecast the total tax take to be $36.2 billion but it was $35.35 billion, or $825 million less than forecast.
In the latest accounts, total core crown revenue was $38.4 billion in the period, down $1.12 billion on forecast, but core expenses were down by nearly $1.4 billion at $45.1 billion.
Accompanying notes to the release yesterday of the Government accounts showed GST revenue was $369 million, or 3.7% lower than forecast. Earthquake-related GST refunds to insurance companies continued to account for most of the variance.
Source tax deductions were $200 million, or 1.4%, below forecast. In February, PAYE was above forecast, reversing some of the previous month's shortfalls.
The Treasury chief financial officer, Fergus Welsh, said the labour market remained slightly weaker than expected and both wage growth and employment were below pre-election forecasts.
As a result, it was expected a $200 million to $300 million difference from forecast would continue to the end of the financial year.
Corporate tax revenue was $193 million, 3.7% below forecast.
Business profits had been lower than expected, resulting in lower than forecast provisional tax, he said.
Other core crown revenue was also under forecast by $342 million.
Further on in the accounts, figures showed some increased expenses, particularly spending on social security and welfare, finance costs and health.
Social security and welfare payments increased by $521 million on the previous corresponding period to account for the annual increase of benefits but also accounting for higher beneficiary numbers.
Finance costs increased by $455 million because of increased debt levels and health increased by $270 million to maintain and improve existing service levels.
Nearly $240 million was saved by changes made to the KiwiSaver member tax credits in last year's Budget.
