"The National Party will go into the election campaign in complete disarray over tax," Labour finance spokesperson Michael Cullen said today.

"Ian Revell has confirmed to the Dominion that the National caucus is divided over when the corporate tax rate should be cut. He will be pushing for a cut before the elections at this weekend's special caucus and has told the Dominion that he will not be alone.

"But Bill English has said the country cannot afford to cut the corporate tax rate now and will need at least two years of solid economic growth before the idea can be considered.

"It is not clear from the Dominion report what Mr Revell and his allies would be willing to sacrifice in order to pay for their corporate tax cut, but they have a number of choices available to them.

"They could push the budget back into deficit, cut spending, or reverse the small income tax cut Mr English announced at the National Party's July conference. All these options would carry a political cost and would be deeply embarrassing to Mr English.

"He has already faced significant embarrassment on the tax issue. The Government had hoped to legislate for its income tax cut - regarded by Mr English as the centrepiece of National's re-election campaign - but has been forced to concede that it hasn't got the numbers.

"Thanks to Bill Birch, Mr English has been subjected to the humiliation of conceding this not once but twice. He has had to rule it out a second time this week after Mr Birch, relentless as rust, apparently re-opened negotiations with the Government's various hangers-on in a last ditch attempt to stitch together a majority.

"The image is of a party in chaos over a key policy area. And there is no way it will be able to resolve these differences before the election campaign because the campaign will begin this weekend when the Prime Minister announces the election date," Dr Cullen said.

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