New Zealand’s government is likely to receive higher revenues from corporate tax this year than originally estimated despite growing insurance liabilities from its accident compensation corporation (ACC) scheme, as it collects more from the portfolio investment entities (PIE) scheme first introduced in 2007.
Figures for the 11 months to 31 May show total tax revenues of NZ$50.54bn (US$40.5bn) against the Treasury’s forecast if NZ$49.87bn. Corporate tax revenues were 5.1% higher than forecast, with net terminal tax assessments and PIE tax NZ$200m ahead of expectations.
“This is encouraging, but the global environment remains uncertain, leading to a number of fluctuations in the tax take from month to month,” said the Finance Minister, Bill English. “This month’s accounts continue to be better than forecast, due to ongoing spending discipline and better than expected goods and service tax [GST]and corporate results. But revenue is still NZ$835m below Treasury’s forecast in the pre-election update last October.
“These fluctuations reinforce the need for the government to keep a firm control on its costs, so that it can stay on track to surplus by 2014-15. We have seen moderate strength in the economy over the past year despite considerable disruption from global uncertainty.
“Balancing the books and returning to surplus is one of the most important things the government can do to build that resilience, as well as take pressure off interest rates and the exchange rate. This helps make our economy more competitive.”
The country is expected to survive the review, which it must do to retain its place in the European Central Bank’s asset purchase programme.
The bank believes that the battered UK currency, recently only just holding above the US$1.20 level, could be trading at US$1.36 by this time next year.
The Middle East oil producer’s debut global bond issue surpassed the total of US$16.5bn raised by Argentina when it tapped the market earlier this year.
The group reports that currency fluctuations were less of a challenge to multinationals in the second quarter of 2016, but Brexit has since spelt a return to volatility.