Government's tax-take billions of dollars above forecast

The Government's tax-take for the 10 months to April 30 was $2.3 billion more than what it predicted just a week ago in this year's Budget.

In Budget 2019, Treasury predicted the tax revenue for 2019 would be $68.8 billion, but actual figures out on Thursday show $71.1 billion.

Treasury defended its forecasting saying the significant variance could be explained by a change to Inland Revenue systems.

That included the transition to a system known as START, used to calculate tax revenue. The latest results were the first set of data from the new system, Treasury said.

Treasury suggested in a statement on Thursday that there was a strong chance the increase could be attributed to a stronger tax take than what it had forecast using the old system.

"The Treasury and Inland Revenue are continuing to do more analysis on the April results and for the May 2019 financial statements," Treasury said.

The Government should not go on a massive spending spree, however. Treasury is saying the extra money may average out over the year and fall in line with its original forecast.

"At this stage, the year-to-date results do not necessarily indicate a significant deviation from the full year expected results."

Within the $2.3 billion tax revenue surplus, individual tax was well-above forecast, and the same goes for corporate tax and GST.

The multi-billion dollar difference was a significant turnaround from when tax revenue was more than $500 million behind expectations up to the end of March.

In the Government's Budget 2019 Economic and Fiscal Update, it says the pace of economic expansion "lost some momentum over the second half of 2018".

But it said indicators of economic activity "point to stabilisation of annual economic growth over the six months to June 2019".

National Party's finance spokesperson Amy Adams said the Treasury's economic growth forecasts "are significantly more optimistic than other institutions".

She said data compiled by the Parliamentary Library showed that the Treasury's economic forecasts over the next year "significantly exceed those by ANZ, Westpac and NZIER".

"If the Treasury's forecasts do prove too optimistic then the Government will struggle to run a surplus next year without either reducing spending or raising taxes."

Treasury had forecast in Budget 2019 that the Government's surplus would be $3.5 billion, down on the $5.5 billion recorded in 2018, but more than had been expected in December.

The Government says the economy "continues to operate near full capacity, with the unemployment rate at low levels, and labour force participation rates at historic levels".