PM's $18 jibe raises pressure on Nats

By Paula Oliver, Patrick Gower

National is coming under political pressure as it prepares to reveal the tax-cut plan that will be an election-campaign acid test for the party.

Leader John Key yesterday confirmed National would announce its tax-cut policy next week - the Herald understands it might be Wednesday, just days after the Government's books are opened.

It is crucial for National's electoral chances that it pitches the tax cuts correctly, as its announcement comes at a time of anxiety over international financial turmoil and as the Government's books go into the red.

Prime Minister Helen Clark yesterday tried to increase the pressure on National by suggesting the cuts would be worth only about $18 a week more than Labour's package - far from the $50-a-week figure that has been touted.

"Some of the hints coming out are that maybe the National Party has overpromised, and rather than there being $50 on top of what Labour is offering the average worker, there might be something around $18," Helen Clark told a campaign meeting in Wairarapa.

She asked her listeners why they would want to change the Government for only $18.

Mr Key and his finance spokesman, Bill English, have acknowledged that expectations are for tax cuts worth about $50 a week, and have suggested their offer will be around these expectations.

But National's leaders are giving away nothing about how the party will reach that $50 level.

It appears the cuts will be worth that to average earners once they are fully implemented, which could take two years.

National will consider the Labour tax cuts that took effect yesterday to be part of that $50 figure - something likely to surprise some voters.

Labour's tax cuts will be worth $32 a week to average earners once they are fully implemented - leading to the $18 difference that Helen Clark has highlighted.

National made tax cuts the centrepiece of its campaign in 2005 and won votes with them because Labour did not offer any.

But this time, Labour has to some extent neutralised the issue by cutting taxes, and National risks disappointing voters.

National will put its cuts into a wider economic management context in a bid to show it has taken world events into account.

The party is expected to fund its cuts by pulling back from some Labour spending plans.

- NZ Herald

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