Expect this to drop alarmingly should a Labour led government be formed

NBR reports:

The final set of accounts for the 2017 financial year, ended in June, is being released by the Treasury and will almost definitely show a larger surplus than was projected in the government budget for the year ? that is, the one which Bill English delivered in May 2016.

There have, of course, been updates of the forecasts in that budget since ? in December 2016, in this year?s budget, and finally in the pre-election economic and fiscal update.

That update, released in August ? projected a surplus of $3.7 billion for the year.

Eleven months of the financial year have already been reported as part of the regular monthly government accounts update.

Those monthly updates show the tax take running well above forecasts and even more above the same period last year: ahead by 7.7% overall, slightly above the increase in nominal GDP over that period, which rose by a little more than 5%.

To put it another way: While tax revenue is up a little more than $1 billion on forecasts for the year, it is up $5 billion from the same period the previous year.

The breakdown of that increase in tax revenue tells a story: The increase in personal tax take is up 6.4% ? again ahead of the rise in nominal GDP.

GST revenue is up 8.4%.

The big increase is the corporation tax take ? up a whopping 17.1%.

The Treasury expects this to come off a bit in the final accounting washup for the year but still forecasts a rise in revenue of a little more than 12% for the full year.

All of that shows that the economy is functioning well.

However it is at risk. One South Auckland businessman I was talking to over the weekend has seen a $2million haircut in monthly sales over the previous month. He puts it down to nervousness over the election. He expect it to slump further as coalition negotiations extend, and if a Labour led government is returned then he expects a significant drop in sales revenue.

The economy won’t sustain a Labour-led government and tax revenues would slump alarmingly.