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English prepared to borrow and slash for tax cuts

Hon Dr Michael Cullen
Minister of Finance

Thursday 5 June 2008 Media Statement
English prepared to borrow and slash for tax cuts

Bill English has confirmed a National government would cut services and borrow more in order to 'out tax cut' Labour, Finance Minister Michael Cullen said today.

Following the Reserve Bank's signalling of monetary policy loosening, Mr English - who had previously distanced himself from John Key's pledge to 'out tax cut' Labour at any cost, suggested that a fall in interest rates would allow National to spend more on tax cuts.

The Labour-led government will deliver $10.6 billion in personal tax cuts and $1.1 billion in Working for Families adjustments from 1 October. At full implementation these tax cuts will see nearly 50 per cent of households better off by $50 a week or more.

"Mr English's glee over the worsening global economic situation is bizarre," Dr Cullen said.

"Nothing in today's Monetary Policy Statement signals more room for bigger tax cuts. In fact, it is quite the opposite.

"The Reserve Bank is painting a much gloomier economic picture than the Treasury. If the Bank is right, government revenue will fall significantly more than predicted, in effect eliminating the very small amount of extra money available to the government.

"If Mr English is now saying that under that scenario he would still implement bigger tax cuts, he is finally admitting he would cut services or get out the credit card to pay for bigger tax cuts.

"New Zealanders know that borrowing for tax cuts is crazy and they absolutely do not want to see cuts to the services they need. But there is really nothing surprising about Mr English's approach.

"He is the man who was willing to cut superannuation during tough economic times in the late 1990s," Dr Cullen said.


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