Doom and gloom merchants may have to take a back seat for a month or two after the Government accounts released yesterday showed an improvement in both corporate tax and GST for the 11 months ended May.
The accounts show that core Crown tax revenue in the 11 months was $50.54 billion, up 1.3% on the Budget economic fiscal update figure of $49.87 billion.
More startling was that the tax take in the year to May was 6.7% higher than the $47.4 billion collected in the previous corresponding period - again throwing doubt on the accuracy of Treasury figures.
The May 2012 operating balance before losses and gains (obegal) was an improvement at a deficit of $5.9 billion compared with a Treasury forecast of $7 billion.
The May 2011 deficit was nearly $11 billion, with this year's obegal a reduction of 45%.
Finance Minister Bill English has been one of the most conservative commentators on his own figures but was moved yesterday to call the reduction in the operating deficit "encouraging" - with a caveat.
"But the global environment remains uncertain, leading to a number of fluctuations in the tax take from month to month."
Of the increased tax take of $667 million for the 11 months ended May, corporate tax was $389 million (5.1%) above forecast, and 2011 terminal tax assessments and portfolio investment entity (PIE) tax were each about $200 million above forecasts.
Tax practitioners have previously warned that some companies may have paid too much provisional tax and will be filing for a tax refund in the future.
GST was $192 million (1.4%) above forecast because private consumption made up a higher proportion of GST than expected. New Zealanders may finally be opening their wallets a bit further.
In the same period, core Crown expenditure of $62 billion was $431 million, or 0.7%, lower than forecast.
At balance date, net debt stood at $49.6 billion - 24.6% of GDP, again below forecast.
Mr English noted revenue for the Government was still below Treasury's forecast in the pre-election update last October.
"These fluctuations reinforce the need for the Government to keep firm control on its costs so it can stay on track to surplus by 2014-15."
However, Treasury has come under fire in past years for either over-optimistic or overly negative forecasts.
Mr English said he had seen moderate strength in the economy over the past year, despite considerable disruption caused by 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."
With the dollar this week reaching a record high against the euro, and a three-month high against the greenback, Mr English needs to acknowledge that exporters are being hurt through the high dollar.
While trying to play down what seems to be the start of an underlying economic revival may seem good politics now, recognising the economy could be sliding out of balance would be a prudent move.
