Govt’s estimating under on tax, over on deficit

Press, 5 June 1982, Page 2

Govt’s estimating under on tax, over on deficit

PA Wellington The Government last year under-estimated the tax take by about $585 million and over-estimated the internal deficit by $271.7M. final figures revealed yesterday. Releasing the Public Accounts summary for the year to March 31. 1982. the Prime Minister (Mr Muldoon) said that the deficit before borrowing was $l.B billion. This was a rise of 19.2 per cent over the previous year, and 13 per cent less than the $2.09 billion forecast in the 1981 Budget. Total tax receipts were $B.B billion, a 24.8 per cent rise over 1980-81 and 7.1 per cent over the budgeted figures. Income tax yielded 22.9 per cent more than the previous year. The Government: received $6.5 billion in income tax for the year, $1.2 billion more than 1980-81. ; Customs, sales tax, and beer duty provided a 37.4 per cent revenue boost over the previous year. ■ The $1.6 billion taken in this area was up $444M on the previous 12 months. • Mr Muldoon said that income tax collections were S3ISM, dr 5 per cent, above the Budget forecast.

“This reflected a higher growth than expected in both personal incomes in 1981-82 and in non-wage and salary incomes in 1980-81. both of which affected the 1981-82 tax take.” he said. Mr Muldoon said that buoyant conditions generally led to a considerable increase in consumer spending. As a result, sales tax rose $164 million and customs duty. $73, million. A higher internal deficit than the eventual figure had been forecast up to the end of December quarter, he said. Trends became “evident" at the end of that quarter. The lower deficit achieved “indicated that Government policies announced in the 1981 Budget were in fact achieving their underlying objective, which was to stabilise economic activity in the short term.” The deficit was equal to 6.4 per cent of gross domestic product (G.D.P.), compared with 6.3 per cent in 1980-81. The figures issued yesterday showed large rises in borrowing. Government borrowing in New Zealand rose by a gross $1 billion, up from $l.l bil-

lion the previous year to $2.1 billion in 1981-82. Borrowing overseas rose from $1.5 billion to $2.1 billion. . The bigger-speriding Government departments had spending rises of close to the rate of inflation. The biggest area of them all, social services, paid out $3 billion in 1981-82. 17.5 per cent up on the previous year's $2.6 billion. Health was up 18.1 per cent at $1.6 billion, and education 15.6 per cent at $1.5 billion. However, the Government's spending on debt services went up 35 per cent.to $1.2 billion. The development of industry cost $1.2 billion, a 48.5 per cent rise. The NZPA political reporter. Peter O’Hara, said that the revelations that 1981 Budget forecasts were wide of the mark followed an admission by the Prime Minister 10 days ago that he was to blame for letting money and credit expand too fast last year. Late in the first half of last year the expansion was at a rate that was faster than desirable, Mr Muldoon wrote in his weekly "Truth" newspaper column.

"I was not aware of this fact until it was too late, and I accept the blame." he said.

In a radio interview on Thursday, Mr Muldoon acclaimed the $l.B billion result, saying.. “Everybody has been talking about $2.3 billion for months." (Mr Muldoon said in his “state of the nation" address at Orewa in January that the deficit would be $2.3 billion.) Mr Muldoon said last week that he had taken steps to see that there was no repeat of the undesirably fast expansion of money and credit. He has called for more frequent information on what is happening, and has started more frequent discussions with advisers and the private sector. Speculation continued yesterday that this year’s Budget would be later than .usual, perhaps in late July or even August. Mr Muldoon said in an interview that lie was no closer to deciding a date and was heavily involved in considering taxation reform. He would not definitely rule out the possibility of a mini-budget or regulations before the Budget.