15 May 2014

PM John Key dangles tax cut carrot

1:42 pm on 15 May 2014

Prime Minister John Key is floating the possibility of future tax cuts as National goes into the election campaign.

Mr Key said Thursday's Budget would show increasing surpluses during the next few years.

The Government should still be able to achieve its aim of getting debt below 20 percent of Gross Domestic Product by 2020, and have some money left over.

"So there are options for that additional expenditure, and they would obviously be spending by the Government or, alternatively, returning that through some sort of tax programme," he said.

Asked where potential tax cuts might be directed, Mr Key said middle-New Zealand was an obvious group which paid a fair bit of tax and did not get a lot in return.

Mr Key said any tax cuts would not be announced in Thursday's Budget, and National would have to decide before the 20 September election if it wanted to include them as part of its campaign promises.

Finance Minister Bill English agreed the Government had options.

"The key thing with the Budget is it's looking ahead, not looking back, because the country's got a sense of direction.

"There will be choices and that's good. We've got better choices than most developed countries."

But asked whether tax cuts were one of those choices, Mr English said: "You'll have to wait and see."

The Government's first priority was to use part of its forecast surpluses to repay debt.

Labour Party leader David Cunliffe was also not ruling tax cuts in or out.

He said if National made moves in that direction, it would be a case of the big bad Budget secret not being in the Budget but becoming an election year bribe.

However, it could create some fiscal head room for an opposition to assess its options - but he stressed Labour could not make any commitments until it saw the Government's numbers.

Green Party co-leader Russel Norman was not impressed with all the talk of tax cuts.

He said the last time Mr Key handed out tax cuts he gave them to the wealthiest people in New Zealand, and the Government had to borrow $5 billion from off-shore in order to pay for them.

Dr Norman said it was ordinary New Zealanders who had to pay that money back.

New Zealand First leader Winston Peters said when the country was in serious deficit the Government cut taxes, and doing it again would only widen the gap between rich and poor.

He said Mr Key was making a dog whistle coming up to the election, now that he was scared at how close the election might be.