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Tax Cuts Promises Of 2005 'Credible' Under Today's Conditions

Fuseworks Media
Fuseworks Media

National leader John Key believes tax cuts of the magnitude it promised in 2005 are credible under today's economic conditions.

Finance Minister Michael Cullen has described as "reckless" Mr Key's promise to provide a "meaningful" tax cut, which Mr Key described as "north of $50" a week, without seeing the books.

Mr Key handed out the lure of a $50 tax cut following the latest Fairfax Media poll, which gave National a 27-point lead over Labour and found 30 percent of voters wanted between $60 and $80 a week in tax cuts.

Mr Key told reporters today the public would have to wait to see National's tax plan when it rolled it out.

"But in 2005 we promised tax cuts which ranged from about $10 to $92 a week, roughly $45 a week for someone on $50,000 a year.

"I described it as a credible programme of personal tax cuts and I'm committed to a credible programme of personal tax cuts," he said.

Questioned on whether National's tax cuts programme of 2005 was credible today given the different economic circumstances, Mr Key said: "Well, I think it is."

"I believe that an ongoing programme of personal tax cuts that delivers the sort of magnitude that we've had in the past is potentially possible.

"Now, let's have a look at the numbers, prepared to have a look at that. There's all sorts of different priorities out there but it's a top priority for us."

He said National would be looking at economic figures and what other promises Dr Cullen made in the budget on Thursday.

But he was "very confident" National could deliver an ongoing programme of tax cuts, like that promised in 2005.

The Government's spending promises are mounting up and Mr Key said Dr Cullen seemed to be trying to "spend the lot".

National would assess "on a case by case basis" the Government's spending promises, Mr Key said.

National's finance spokesman Bill English did not directly answer whether he was happy with Mr Key making public the "north of $50" figure, saying Mr Key was making clear public expectations were "quite high". "We'll put out a credible programme. We'll get a set of numbers in the budget. We'll have to be pretty careful about what timebombs Labour is leaving in there. If they go down the track of further reckless promises like purchasing Toll that might squeeze it up a bit but we're pretty committed to tax cuts."

Mr English agreed with Mr Key that a tax cuts programme like what the party offered in 2005 was credible given economic conditions today.

The 2005 package contained a range that "we believe is still within the bounds for the next election".

Mr English also indicated National's tax cuts programme would be staggered.

"We're looking ahead to when New Zealand goes through this downturn and comes out the other side.

"If you don't get started you never have tax cuts and Australia has shown that if you do get started and have a credible programme over time you can have a significant difference to people's after-tax incomes."

Mr Key said Dr Cullen had made the same comments yesterday about the affordability of National's tax cut promises as he had made in 2005.

"What we now know in hindsight was not only was that programme affordable and deliverable, but actually New Zealanders would have been a lot better off. We'll run our own tax programme and he's welcome to run his."

"We have tax cuts as a top priority issue."

Dr Cullen has repeatedly dampened down expectations about the size of cuts his party will deliver in Thursday's budget.

He is set to deliver his ninth budget on Thursday when the latest fiscal forecasts will be revealed.

Dr Cullen indicated yesterday there would be less money to deliver cuts but these were less likely to be inflationary given tougher economic times.

"He'll (Mr Key will) find there isn't a lot of room left after Thursday afternoon," Dr Cullen said.

He said yesterday Mr Key was being "slippery" with his talk of a tax cut "north of $50".

He said a $50 cut would cost $5 billion a year and that it was irresponsible to make such a plan without knowing what the fiscal forecasts were.

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