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Falling revenues, spending spark debate over New Zealand's economy

(Xinhua)

13:12, February 20, 2012

WELLINGTON, Feb. 20 (Xinhua) -- The New Zealand government saw revenues and spending drop in the six months ending December last year, prompting the government to renew its vow to tighten spending, while critics said the figures indicated growing state debt.

Core revenue was 28.629 billion NZ dollars (24.07 billion U.S. dollars), 743 million NZ dollars lower than forecast in October, with tax revenue in the first half of the financial year 400 million NZ dollars or 1.5 percent lower, said a statement from the Treasury on Monday.

Meanwhile, core expenses were 34.087 billion NZ dollars, 887 million NZ dollars below forecast, said chief financial officer Fergus Welsh in the statement on the Financial Statements of the Government.

Including gains and losses, the operating balance deficit, at 9. 5 billion NZ dollars, was 2.6 billion NZ dollars or 37.8 percent higher than forecast.

While revenue from the Goods and Services Tax (GST), a consumption tax, was likely to rise over the second half of the financial year, the outlook for corporate tax revenue was weak.

"Data on provisional tax assessments received during the month of December, together with slightly weaker-than-expected growth in GDP in the September quarter, indicates that corporate profits may be weaker for the full financial year," said Welsh.

Finance Minister Bill English said the government was "on track " with its fiscal plan.

"Lower tax revenue reinforces the need for the government to be disciplined in its spending and stick to its plan to get back to surplus in 2014-2015," English said in a statement.

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