Suspicious Nats doubt Cullen's commitment to tax cuts

A sceptical National Party isn't sure Finance Minister Michael Cullen has the political will to carry out a tax cuts programme.

Dr Cullen yesterday announced tax cuts would be phased in over three years, but he didn't say how much he was going to give back or when the first change would cut in.

Last night he said he would disclose details in the May budget and he expected Parliament would pass the legislation before the election.

He has removed National's chance to upstage him - unless it says it will deliver much bigger cuts - but party leader John Key said there was still a big difference.

"We're going to come in as a government and cut taxes," he told reporters.

"What he (Dr Cullen) seems to be saying is...I'll do it begrudgingly and I've come up with four tests that will look like an excuse if I don't feel like it."

The four tests have been set out before by Dr Cullen and he repeated them yesterday.

* No borrowing to pay for tax cuts;

* No cuts in services;

* No impact on inflationary pressures; and

* They must not lead to greater inequality in society.

However, despite Mr Key's suspicions, Dr Cullen has now committed himself in the strongest terms yet to cut taxes and failing to deliver would be devastating for the Government in an election year.

After his speech to the Auckland Chamber of Commerce, when he announced his programme, he told reporters the cuts would be spread "quite broadly" rather than aimed at the top end of the income scale.

The Treasury is known to have been working on a figure of $1.5 billion a year as the revenue cost for tax cuts, but Dr Cullen said assumptions should not be based on that.

"That doesn't necessarily mean that is what's going to happen," he said.

"I don't have an updated economic forecast, even as we're standing here we know that international markets are fluctuating quite wildly at the present time."

Dr Cullen said he had seen one commentary which suggested there would be tax cuts of $60 across the board.

"I think (Reserve Bank governor) Dr Bollard would feel inclined to hire a crew to take me away somewhere and drop me off a ship if I was to announce something like that."

- NZPA

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