Bill English MP
National Party Finance Spokesman

5 November 2007

Labour talks tax as accounts bulge

National Party Finance spokesman Bill English says new Treasury figures highlighting the level of over-taxation explain why Labour is talking up its U-turn on tax.

The operating balance, excluding gains and losses, is $363 million ahead of forecast for the three-month period to 30 September 2007. The main driver was total Crown tax revenue which was $278 million (or 2.1%) higher than forecast.

"There is absolutely no doubt that Michael Cullen has had ample opportunity to reduce taxes long before now.

"Labour's talk of tax cuts at the weekend was a transparent effort to head off looming criticism about the size of growth in Government surpluses, while borrowers face the crunch from higher interest rates and a taxation burden that is in the top half of the OECD."

Mr English says the half yearly financial update is set to make a mockery of Michael Cullen's previous arguments about affordability.

"He had no choice but to change his story. However, Labour's attack on officials is a feeble excuse which won't wash.

"Treasury has repeatedly told Michael Cullen that he should cut taxes, but he has rejected their advice at every turn. He even publicly rounded on them for floating the idea.

Mr English is referring to what Dr Cullen described as the 'ideological burp' when, more than two years ago, Treasury advised the incoming Government to cut taxes to promote growth.

'I am elected, they're not', Dr Cullen said, while dismissing suggestions that tax cuts promote growth.

"The Emperor has no clothes. Dr Cullen rejected the idea outright as an 'ideological burp'. He took responsibility for the lack of tax cuts. But now, Labour's saying it is all the officials' fault, even though those same officials were the ones promoting them."

ENDS

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