Revenue
|
Year ended 30 June $ million |
Actual 2008 | Actual 2009 | Actual 2010 | Actual 2011 | Actual 2012 |
Forecast 30 June 2012 |
|
|---|---|---|---|---|---|---|---|
| Budget 11 | Budget 12 | ||||||
| Core Crown tax revenue | 56,747 | 54,681 | 50,744 | 51,557 | 55,081 | 55,222 | 54,741 |
| Core Crown other revenue | 5,072 | 4,801 | 5,472 | 5,993 | 5,484 | 5,839 | 5,290 |
| Core Crown revenue | 61,819 | 59,482 | 56,216 | 57,550 | 60,565 | 61,061 | 60,031 |
| Crown entities, SOEs and eliminations | 19,660 | 20,024 | 18,509 | 24,013 | 22,918 | 21,672 | 22,544 |
| Total Crown revenue | 81,479 | 79,506 | 74,725 | 81,563 | 83,483 | 82,733 | 82,575 |
| % of GDP | |||||||
| Core Crown tax revenue | 30.7% | 29.7% | 26.9% | 26.1% | 26.9% | 27.6% | 26.3% |
| Core Crown other revenue | 2.7% | 2.6% | 2.9% | 3.0% | 2.7% | 2.9% | 2.5% |
| Core Crown revenue | 33.5% | 32.3% | 29.8% | 29.1% | 29.6% | 30.6% | 28.9% |
| Crown entities, SOEs and eliminations | 10.6% | 10.9% | 9.8% | 12.1% | 11.2% | 10.8% | 10.8% |
| Total Crown revenue | 44.1% | 43.2% | 39.6% | 41.3% | 40.8% | 41.4% | 39.7% |
Total Crown revenue increased over the year by $1.9 billion to $83.5 billion.
The key driver of the increase in revenue was that core Crown tax revenue (figure 5) increased $3.5 billion from last year, or 6.8%, as the New Zealand economy continued to recover from the global financial crisis (GFC).
- Figure 5 - Core Crown tax revenue
- Source: The Treasury
In addition, the revenue from the SOE sector increased $1.8 billion from last year as most companies reported higher operating revenues, largely offset by higher operating expenses.
Offsetting the improvements in revenue this year was a fall in ‘other revenue', mostly because last year there were large insurance recoveries in relation to the Canterbury earthquakes.
Core Crown Tax Revenue
Core Crown tax revenue was at its highest level since the GFC as the economy continued to recover. This year nominal GDP grew by 3.5% and there were notable rises in domestic spending, personal incomes, and business profits. Table 7 summarises the movements in tax revenue from last year. Specifically:
- Business profits (both corporate and individual) increased over the year predominantly due to recovering profitability following on from the GFC.
- Nominal private consumption increased substantially in the 2012 fiscal year and along with the rise in the GST rate on 1 October 2010 led to an increase in GST revenue of $0.9 billion compared to 2010/11.
- Salaries and wages continued to grow this year, flowing to increased tax revenue from New Zealand's workforce. However, the impact of personal income tax cuts in October 2010 partially offset the recovery in wages ($0.8 billion).
| Year ended 30 June | |
|---|---|
| 2011 core Crown tax revenue | 51.6 |
| Tax on business profits | 2.0 |
| GST | 0.9 |
| PAYE | 0.4 |
| Other movements | 0.2 |
| 2012 core Crown tax revenue | 55.1 |
Compared to forecast, core Crown tax revenue was $0.3 billion (0.6%) higher than expected (figure 6). The key driver of the difference was higher than expected business profits, largely due to growth in funds under management in PIE funds. Most other tax types were very close to forecast, GST had the next largest variance, $0.1 billion (or 0.5%) lower than forecast.
- Figure 6 - Core Crown tax revenue against forecast
- Source: The Treasury
Other Revenue
Other revenue includes other sovereign revenue (eg, ACC levies), sales of goods and services, interest income and dividend income.
This year, other core Crown revenue was $5.5 billion, while income from SOEs and CEs was $22.9 billion, a total of $28.4 billion ($1.6 billion less than last year, figure 7).
- Figure 7 - Other revenue
- Source: The Treasury
Included in other revenue are insurance recoveries from the Canterbury earthquakes of $0.9 billion ($4.5 billion last year). Once the earthquake related revenue is removed, other revenue was $2.0 billion higher than in 2011.
The key contributor to the higher revenue was that the sales of goods and services from the SOE sector were $1.7 billion more than last year. While their revenue grew, it was offset by a similar increase in operating expenses.
There was also growth, albeit less notable, in a number of other Crown revenue sources. ACC levies and interest and dividend revenue (primarily due to the increase in Kiwibank mortgages) both experienced small growth from the previous year ($0.1 billion and $0.2 billion respectively).
Compared to forecast, other revenue was $0.6 billion higher than the expected $27.8 billion. This was largely due to higher than expected sales by SOEs ($0.3 billion) and insurance proceeds being recognised earlier than expected by departments in respect of claims from the Canterbury earthquakes ($0.2 billion).
Core Crown Tax Revenue as a Percentage of GDP
Core Crown tax revenue increased relative to GDP in the year to June 2012 after three years of decline (table 8). Values in table 8 were estimated using data as at 21 September 2012 and could change in the future as current data are revised and more data become available[3].
|
Year ending 30 June % of GDP |
2008 Actual |
2009 Actual |
2010 Actual |
2011 Actual |
2012 Actual |
Total 4 years |
|---|---|---|---|---|---|---|
| Core Crown tax revenue | 30.7 | 29.7 | 26.9 | 26.1 | 26.9 | |
| Annual movement | (1.0) | (2.8) | (0.8) | 0.8 | (3.8) | |
| Annual movement owing to: | ||||||
| Legislated tax system changes | (2.0) | (0.8) | (0.2) | 0.4 | (2.6) | |
| Composition of GDP | (0.7) | 0.3 | (0.4) | (0.3) | (1.1) | |
| Timing | 0.2 | (0.9) | (0.2) | 0.7 | (0.2) | |
| Company tax losses | 0.3 | (0.6) | 0.1 | 0.1 | (0.1) | |
| Structured finance tax settlements | 0.9 | (0.6) | (0.3) | - | - | |
| Fiscal drag | 0.2 | 0.1 | 0.1 | 0.1 | 0.5 | |
| Other | 0.1 | (0.3) | 0.1 | (0.2) | (0.3) | |
| Total annual movement | (1.0) | (2.8) | (0.8) | 0.8 | (3.8) |
Legislated tax system changes shows movements in tax revenue caused by changes to tax rates, thresholds and taxable bases. The 0.4% of GDP increase in the June 2012 year shows the revenue-positive aspects of the 2010 Budget Update package beginning to take effect.
The composition of GDP affects the tax-to-GDP ratio because not all parts of GDP are taxed at the same rate. For instance, compensation of employees, which measures total wages and salaries in the economy, has a higher average implicit tax rate than does operating surplus, the measure of profits in the economy.
Timing largely reflects movements between years caused by changes in the amounts of tax paid as provisional tax and final tax, ie, tax due on profits is not always paid/recognised in the same year in which the profits were made, causing tax revenue to slip from one June year to another.
Tax losses - Income tax payers can use accumulated tax losses to reduce the amount of tax that they pay on profits earned in later tax years. This loss-offset effect is most prevalent in company tax and can result in swings of several hundreds of millions of dollars in income tax from one year to the next.
Structured finance tax settlements - refers to the major trading banks' settlements of their structured finance tax liabilities, which were mostly recognised in 2009.
Fiscal drag is the additional source deduction (ie, PAYE) revenue generated as an individual's average tax rate increases as their income increases.
Notes
- [3]For instance, this table differs slightly to Table 2.4 on p.28 of the 2012 Budget Economic and Fiscal Update, mainly owing to recent revisions to previously-released values of nominal GDP and its components.
