8 November 2007 Media Statement

National to fail the tax tests

The National Party will never oppose the Labour-led government’s four tests on tax cuts, but they are certain to fail every one of them, Finance Minister Michael Cullen said today.

Dr Cullen has previously announced that he has set himself four tests for the design of the Labour-led government’s 2008 personal tax cuts.

- There will be no borrowing to pay for them
- There will be no cuts to services to pay for them
- They will not exacerbate inflationary pressures
- They will not lead to increased inequality in our society

“The Labour-led government has presided over the longest sustained period of economic growth in more than a generation,” Dr Cullen said. “Wages are up, poverty is down, profits are up, and just today we have learned that our unemployment rate is the lowest ever recorded.

“This economic record and the government’s strong fiscal management has led to strong surpluses, allowing us to invest in tax cuts for families, for businesses, and for savers, all opposed by the National Party.

“Treasury is signalling that the surpluses look set to remain stronger than expected, giving us room to address personal tax in Budget 2008. We will do so in a way that passes our four tests and is a genuine extension of our economic and social programme.

“The National Party meanwhile will never argue with the tests, but their tax plan will surely fail all four. They have already promised to borrow to pay for them, they have previously called for cuts to services, they have a total disregard for the inflationary impact of their policies, and they believe greater inequality is good for the economy.

“I look forward to watching John Key and Bill English try to manoeuvre out of their tax cut cul-de-sac in the run up to next year’s election.”

ENDS

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