New Zealand Slashes Budget Deficit

October 8, 2013 Taxation in Asia-PacificTaxation in New Zealand

IMG_9342WELLINGTON – New Zealand’s budget deficit is half of its previously expected level, due to increasing tax collections, lowering government expenditures.

In a statement issued on October 7th the Finance Minister of New Zealand Bill English confirmed that following a year of better than forecast fiscal results the government is on track to meet its long-standing target of reaching a budget surplus by the end of the 2014 fiscal year.

The Minister’s statement came soon after the national Treasury released the Financial Statements of the Government of New Zealand for the Year Ended 30 June 2013, showing that the operating deficit for the year was only NZD 4.4 billion, approximately NZD 3.5 billion less than previously forecast.

The Financial Statements also showed that the tax revenues for the year were approximately 0.6 percent above forecast, reaching NZD 58.7 billion.

The government’s expenditure for the same period were 1.9 percent below the previously planned level, totaling NZD 70.3 billion.

According to the Minister the increase is a result of the government’s efforts to expand the tax base, and to create a fairer tax system, although the Treasury added that the rise in revenues is due to higher than expected collection of corporate income tax.

The Finance Minister attributed the reduced expenditure to “…the Government’s prudent approach to fiscal management,“ and explained that the “… Government has consistently examined how public services are delivered …to reduce costs while improving the services New Zealanders receive.”

In line with the government’s plan, as soon as the budgetary surplus is reached, a decision will need to be made as to whether to begin reducing the contry’s current debt balance, or to put the money towards priority public projects, such as education, healthcare, or funding of the rebuild of the earthquake stricken Canterbury region.

Photo by Naked_Eyes