Tax Revenues in New Zealand Below Forecasts

February 21, 2012 Taxation in New Zealand

New ZealandWELLINGTON – New Zealand has seen lower than expected tax collections levels in 2011, but the drop was offset by economic measures taken by the government to decrease own spending levels.

According to the latest Financial Statements of the government of New Zealand, which were released on February 20th by the Treasury of New Zealand, tax revenues in the country over for the six month to December 2011 were 1.4 percent below forecast, but 3.3 percent greater than in the same period of the previous year.
The total tax revenues collected in New Zealand during the six months were NZD 26.4 billion, while the government’s forecast for the time period was NZD 26.8 billion. Under the current economic conditions the government now expects to see cumulative tax revenues for the 12 months ending June 2012 reach approximately NZD 55.5 billion.

According to the Treasury, the lower than expected tax revenue were largely a result of a drop in personal income tax collections in the country, however, the decrease is believed to be a seasonal effect, which will be reverse in the second half of the year.

The revenues raised from Goods and Service Taxes were also below forecast, due to a higher than expected number of tax refunds paid to insurance companies which made payments for claims related to the Canterbury earthquakes, which occurred throughout the last year.

The Financial Statements also noted that the lower than expected tax revenues were offset by the economic measures taken by the government to cut spending by NZD 887 million to a total of NZD 34 billion.

Commenting on the Financial Statements, the Minister of Finance of New Zealand Bill English said that the latest tax revenues result “…reinforces the need for the Government to be disciplined in its spending and stick to its plan to get back to surplus in 2014/15.”

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