By Peter Wilson of NZPA

Wellington, Aug 17 NZPA - Peter Dunne could have a hard time getting his income-splitting bill enacted because it would cost the Government $450 million a year in lost revenue.

Under the bill parents with children would have the option of combining their income and splitting it down the middle for tax purposes to reduce their liability.

Mr Dunne, leader of the United Future Party and Minister of Revenue, says more than 300,000 families would be eligible and could make significant savings by shifting their split income into lower tax brackets.

He estimates that with maximum uptake it would mean a revenue loss of $450 million a year, and Prime Minister John Key had something to say about that yesterday.

"With the Government's finances remaining constrained there is a very high bar for tax changes that cost the Government money," he said.

"But we will reserve final judgment until the select committee process has run its course."

Mr Dunne has introduced the bill under the support agreement United Future and National signed after the last election, and the Government has undertaken to support it on its first reading.

That will send it to a select committee and Mr Dunne is confident an overwhelming display of public support won't give the Government much option about backing it through to the end.

"The bill will give couples with children the option of having a parent work fewer or more flexible hours, be at home raising their children, and able to increase their combined after-tax income," he said yesterday when he launched the bill.

"We constantly hear the term `family-friendly' bandied about, but this bill will actually put money in the pockets of many families who choose to have a parent more actively involved in raising their children."

The Labour Party is opposing it, saying it favours wealthy parents and ignores families that are in real need of support.

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