In Budget after Budget in Michael Cullen’s time the Treasury has been wrong. It has projected less revenue than the economy dished up. This time, if the Treasury is wrong again, chances are revenue will be lower, not higher.
Just whose problem will that be?
In an economic upswing companies do well, profits rise, individuals’ incomes rise and taxes deliver a chunk of all that to the Treasury, with a lag — and with a built-in bonus: fiscal drag siphons a higher proportion of individuals’ incomes in taxes as their incomes rise through the thresholds at which higher rates cut in.