9 Sep 2014

National pledges tax cuts, but short on detail

3:57 pm on 9 September 2014

The National Party is promising tax cuts in April 2017 if it leads the next Government and the public finances are in good shape. The cuts - if they go ahead - would be small and aimed at helping low and middle income earners the most.

Watch video of National leader John Key discussing tax cuts

Apart from giving the date of tax cuts today, Prime Minister John Key had little other details to release.

Mr Key has criticised Labour opponent David Cunliffe for not knowing the detail of Labour's tax policies - but was unapologetic about not being able to spell out the specifics of National's plan.

"We ourselves haven't decided what the structure of that might look like - there's obviously rates, there's obviously thresholds, there's potentially other mechanisms," he told reporters in Wellington today.

"But what we do want to do is make sure we build up that kitty of money that's available to be returned, and that we demonstrate to New Zealanders that we want them to get ahead under their own steam."

National intends committing $1 billion a year to new spending over the next three years, while retaining $500 million a year for tax cuts and debt repayment. Mr Key said National would have about $1 billion available for tax cuts in 2017. He said even if it amounts to a cut of just $10 a week, low income families would benefit.

Finance spokesperson Bill English said a National Government would allow between $600 million and $700 million a year more for health and education. He said National would also reduce net government debt to 20 percent of GDP by 2020, after which it would resume payments to the Superfund.

ACC levies on households and businesses would be reduced from April 2016, he said, and income tax cuts would begin from 1 April 2017, providing economic and fiscal conditions allow.

Plan vague and laughable - Cunliffe

The Labour Party says National's tax announcement is vague and shows it has no plan and nothing left to offer. Leader David Cunliffe told reporters today there is no detail and is a laughable promise of an undefined tax cut for an unclear number of people.

"The same Prime Minister that's been challenging Labour on incredible levels of detail over the last week can't even tell us for sure what tax rates or thresholds he would change in three years' time."

Watch Labour leader David Cunliffe

Books need to be in order - Key

Earlier, John Key told Radio New Zealand's Morning Report programme that the party's calculations showed there would be money available for tax reductions.

"There is a sort of pecking order if you like," he said. "The first thing is to grow the surpluses that we are... predicting to take place. The second thing is to pay off a little bit of debt. The third thing is to ensure ACC levy reductions take place.

"That does leave some cash a little bit further out potentially for a tax package. That will be aimed at lower to middle income New Zealanders."

Mr Key said if he read the public correctly, they were in the same position as the Government in believing the books need to be in order before tax cuts were implemented.

"But actually over time it does make sense to return money to New Zealanders as we see the average wage rising ... near to where the top personal rate cuts in."

Mr Key said the tax cut announcement was not a sign of panic, as National fundamentally believed in lower taxes in contrast to Labour which proposed introducing new taxes.

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