26 March 2008

Labour has no interest in Key’s bidding war on tax

National leader John Key today expressed confidence his party will “out tax cut” Labour in this year’s election, but he ignores an issue of vital interest to most New Zealanders and that is at what cost, says Finance Minister Michael Cullen.

“The Labour-led government’s programme of personal tax cuts, to be outlined in Budget 2008, will not be achieved at the expense of the ongoing delivery of the social services that a majority of New Zealanders require and deserve.”

Labour has set four tests that it will meet when delivering personal tax cuts – its package will not be funded by new borrowing, it will not require cuts to social services, it will not exacerbate inflationary pressures or social inequality.

“Labour believes that it is vital that its programme of personal tax reductions be credible, and one of those tests is that personal tax cuts will not require reductions in social services because any reduction in social services is not only unfair on families but it is also not sustainable,” Dr Cullen said.

Labour’s personal tax cut programme comes on top of the $4.5 billion a year worth of tax relief already rolled out which has been targeted at families with children, personal savings and companies. The programme also comes on top of the very significant increased investment in health, education, infrastructure and superannuation over eight years.

On Breakfast TV this morning Mr Key said: “Put it this way, I don’t think Labour is going to out tax cut National. Last time, we proved that we could do that”.

“But Mr Key is being slippery by telling only half the story.

“He fails to mention that in the 1990s, National’s priority for ill-designed personal tax rate cuts were preceded by significant cuts to social services, and the ill-designed rate cuts were followed by a cruel cut to the floor of NZ Superannuation in 1999.

“Mr Key is being slippery because he doesn’t mention that child poverty rates peaked, he doesn’t mention that essential investment in roads was deferred and he doesn’t mention also that the cost of going to the doctor, or sending your child to childcare, sky-rocketed on National’s watch of out-bidding Labour on personal tax cuts,” Dr Cullen said.

ENDS

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