Falling revenue from corporate taxes has caused the Crown accounts to dip further into the red.
The latest figures, for the first 10 months of the financial year, put core Crown tax revenue at $92.3 billion. That's $1.4 billion below forecast.
The figures from Treasury show corporate taxes $1.7 billion lower than forecast, but the impact of this was offset slightly by small gains elsewhere in the tax system.
But core Crown expenses were $103.5 billion. This was close to forecast.
However, the drop off in company tax meant the operating balance before gains and losses (OBEGAL) deficit was $7.0 billion. That's $1.3 billion greater than the forecast deficit of $5.7 billion. This is largely because of the core Crown variances.
Net debt at $76.4 billion (20.1% of GDP), was higher than forecast by $0.3 billion. This was driven by a higher than forecast residual cash deficit, and higher than forecast Crown entity borrowings.
This was, however, offset by favourable movements in the fair value of financial assets and liabilities, which includes the New Zealand Superannuation Fund.
Net worth attributable to the Crown was $168.3 billion, which was $3.6 billion lower than forecast, largely as a result of an unfavourable movement in the operating balance.
15 Comments
No surprise as data lags and observation of retail spending and falling sales of houses/cars is early indication of whats to come namely further falls in tax receipts and a reduction in value of crown assets making the net debt position worse. Hopefully a ACT/National Govt Oct 2023 will address the underlying issues that Labour always leaves - rot in hell Cullen and Clarke.
It took 40 years of different Governments to put is where we are. But yes, a fix is coming, no matter who gets elected in October. And no matter what any politician tells us they will do, they won't. So that 'early indication of what's to come' is dead right. It's baked in now, and all we can do as individuals is get ready. It's going to hurt.
National wants to reverse both the interest deductibility and the MDRS changes that this current Labour government put through. Given that most of the excessive costs in our society come back to a shortage of housing and people using housing as a financial asset driving up prices and distorting the economy, you're out of touch if you think National will "address the underlying issues" - unless you mean make it worse.
net migration gain of 65,400 in the March 2023 year
Mind you, that's on not a full year of reopened borders - applications were reopened for work and study visas on July 1 and INZ was working through several systemic issues in processing visas at the time.
We gained over 12k net migrants in Feb and March each of this year, which is much more than Treasury's labour force growth forecast.
Labour collected an extra $22M in tax from landlords in 2022, while spending an extra $330M in emergency housing costs (up from the $36M National spent in 2017). This Govt's policies are completely financially irresponsible. If its cheaper to let private landlords house people, then let them.
I agree. Landlords are simply the scapegoats for a government that is unable to fix construction bottlenecks and perverse tax policies that favours investing in properties for capital gains, not rental yield.
Not that the Opposition can fix this issue for renters either, but more so because of an abject lack of concern for the have-nots.
If you consider the fact that rents have doubled in the last 10 years along side a housing bubble, and the cost of interest on the mortgages those IPs hold. I don’t think private landlords are currently a cheaper option, it’s just that only half the population are funding this cost. Usury, as one commenter pointed out.
Unfortunately we can’t go back in time, but I don’t believe “more of the same” is good for the future economy.
Cheaper isn't the right word (but can be said to be true, because the transactional and social cost of relying on the state to provide a house is very high). When funding has to be channelled through Government coffers to purchase an outcome, that's very inefficient. If a renter can negotiate directly with a landlord to access quality housing; the desired outcome of people being housed is achieved. If you have to be on a state waiting list, then the presumption is you're not in quality housing for longer.
The tax on LLs appears to be very small c/w the overall deficit. Some would say it's a squirrel. Labour has put the Government's finances on the rocks and you can point to many spending choices that dwarf the trifling tax that's being extracted from landlords (and by extension their tenants).
A government deficit also equals a private sector surplus and so the private sector must have run a surplus of $7 billion and this will show up in increased household and business savings. We also must finance our current account deficits of over $30 billion annually,
All financial flows between the three sectors of the economy must net to zero, a surplus in one and or another must be an equal deficit in one and or another. (Sectoral Balances).
Wikipedia https://en.wikipedia.org/wiki/Sectoral_balances
Borrowing is an asset swap on the Reserve Banks balance sheet from central bank reserves and into bonds and which are both forms of the governments currency and that is why government borrowing doesn't appear in sectoral balances as there is no change in the balance between the sectors, banks exchange their reserves for bonds and there is no change in the governments balance or the private sectors. Borrowing is a monetary and not a fiscal procedure, it doesn't finance spending. QE shows this when the bonds became reserves again, it's just an asset swap.
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