Willis walks back promise to return a surplus by 2027

Coalition spending cuts look unlikely to get books back to black by timeframe promised at 2023 general election

Finance Minister Nicola Willis is continuing to walk away from National’s pre-election promise to get the Government’s books back in surplus by the 2026-27 fiscal year.

“I will be updating our fiscal goals at our Budget Policy Statement on the 27th of March,” Willis said.

“Our goals at that time will take into account the latest forecasts.”

Willis is worried the Government won’t collect as much tax as expected late last year because of the sluggishness of the economy.

Her comments suggest the Government is unwilling to do whatever it takes to get the books out of the red by 2026-27.

While Willis is looking for fat to cut out of the public sector, and will increase welfare payments by less than the Labour Government would have, she remains committed to delivering a range of tax cuts.

Details of how the Government will water down the planned trustee tax rate hike are expected to be unveiled later this week.

The Government will, at some stage before the May 30 Budget, confirm how quickly it will phase out the interest limitation rule, which prevents residential property owners writing off interest as an expense.

Meanwhile, the Budget is expected to unveil exactly how the Government will change income tax thresholds.

The country’s de facto capital gains tax, or bright-line test, is also expected to be reduced from 10 years to two years from July 1.

The tax cuts will be delivered as the latest Crown accounts show the Government collected $752 million (or 1.1 per cent) less tax in the seven months to January 31 than was forecast by the Treasury in its Half-Year Economic and Fiscal Update, pub