The Associate Finance Minister has told Newshub he understands how Labour made a "mistake" in accusing the Government of messy accounting.
Labour alleged on Tuesday afternoon that the Government failed to account for the cost of three months' worth of interest deductibility changes.
Figures first provided to Newshub on Monday show reinstating the ability to deduct interest costs on residential property will cost $2.915 billion - $800 million more than budgeted by National in its election manifesto.
Under the policy landlords will be able to claim 80 percent of their interest expenses from April 1, 2024 and 100 percent from April 1, 2025 onwards.
The figures released to Newshub show the changes costing $360m in the 2024/25 year, $785m in 2025/26, $855m in 2026/27 and $915m from 2027/28 onward.
In the table provided, there was no cost booked against the 2023/24 fiscal year - that led Labour to make the claim the Coalition had failed to book what they calculated as three months' worth of paying for the policy.
"The Government has forgotten to include $90 million of the cost of changing interest deductions for landlords in the current financial year, a scheme costing almost $1 billion more than they bargained for," Labour's finance spokesperson Barbara Edmonds said.
Edmonds and Labour revenue spokesperson Deborah Russell argued that as the changes come into force in April 2024, they need to be accounted for in the 2023/24 year.
"No cost has been released for 2024/25, even though the policy takes effect from 1 April 2024, the start of the last quarter of the government's financial year. Based on the numbers released by the government, that cost is likely to be $90 million, a quarter of the cost of the first year of the policy.
"The mega landlord priority is becoming more and more expensive, while support for children and families has well and truly fallen by the wayside," Russell said.
But Associate Finance Minister David Seymour told Newshub the Government had been advised by Inland Revenue no costs need to be booked this year.
"We understood how Labour could make this mistake. We too assumed in our alternative budget that there would be costs in this fiscal year because the tax year starts in April and the fiscal year ends in June."
Government fiscal years run from July to June, whereas the financial year runs from April to March. Newshub spoke to an economist, an accountant and a former finance minister, none of whom had a solid answer on which year the cost should impact the Government books.
"Inland Revenue advises us that Government costings are done on the basis of when a person's tax return is filed with Inland Revenue. The tax returns won't be received until well into the Government's fiscal year 2024/25," Seymour said.
"No tax returns will be received in the fiscal year 2023/24. There is therefore no cost in 2023/24."
