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Tax take boosts government's books

NZN 9/05/2017

In it's final set of accounts before this month's budget, the government has unveiled a $1.5 billion surplus.

Increased revenue from taxes and lower expenses boosted the operating surplus above it's $147 million forecast in the first nine months of the financial year.

"It is clear New Zealand is now one of the few developed countries currently running a fiscal surplus, and that's a real tribute to the hard work done by all Kiwis over the last thee years," Finance Minister Steven Joyce said.

The operating balance before gains and losses (obegal) was a surplus of $1.5 billion in the nine months ended March 31, well above the $147 million surplus it forecast in December and up from $167m in the prior year, the latest Crown accounts show.

Tax revenue rose 7.3 per cent to $53.9b, $527m ahead of the December half-year fiscal and economic update forecast, of which corporate taxes continued to be the largest driver of increase, according to Treasury.

"This increase was across both provisional and terminal tax indicating that profits in 2016 tax year were higher than forecast and that this has continued into the 2017 tax year," Treasury said.

The figures prompted a call for tax cuts from Taxpayers Union executive director Jordan Williams and ACT leader David Seymour.

"Today's numbers show that the government can easily afford the sort of tax relief packages that would allow households to pay down debt," Mr Williams said.

Mr Seymour said a perfect opportunity existed.

"There's a perfect storm for tax cuts with this extra revenue from taxes," he said.

"I just hope Steven Joyce can deliver some hubba bubba in his budget."

While the Crown accounts showed the overall tax take was ahead of expectations, GST was $145m below forecast primarily due to lower than expected residential investment.

The government's expenses were $56.6b, $722m or 1.3 per cent lower than forecasts.

The majority of this variance relates to forecast expected costs in relation to the Kaikoura earthquakes, which have yet to eventuate.

The Treasury expects the Crown will post an operating surplus of $473m in the year ending June 30 and will update that forecast in the May 25 budget, which will be Finance Minister Steven Joyce's first in charge of the purse strings.

In a pre-budget speech last month Mr Joyce announced a $2b boost to additional infrastructure spending over the next four years to $11b, and wants to almost halve net debt as a proportion of the economy by 2025 and still has plans for potential tax relief and improving public services up his sleeve.

The accounts show net debt at $62b, or 23.8 per cent of GDP, below the projected $63.7b.

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