Just for a moment there it sounded as if the Government might be preparing to renege on its promise of income tax cuts over the next three years.
At a conference on tax policy at Victoria University last week, Finance Minister Bill English was laying out some home truths about how utterly the fiscal backdrop for such discussions has changed - Budget deficits and relentlessly mounting Government debt as far ahead as the eye can see.
"The opportunities to reduce tax rates further will be fairly minimal," he said.
But when asked if in saying that he was signalling something about the string of income tax cuts National had campaigned on, the answer was a curt "No".
And quite right too.
Some argue the tax cuts should be dropped on the grounds that these are critical times and tax cuts are not an effective form of fiscal stimulus, since the recipients are liable to save them, not spend them.
But as the origins of the recession lie in excessive borrowing and spending, that response is no bad thing from a longer-term perspective.
Dealing with the repercussions of the worst global recession of the postwar era, daunting as that is, is not the only economic challenge we face.
There are structural problems as well, and the tax system is one of them.
It is, as PricewaterhouseCoopers chairman John Shewan told the conference, not sustainable. "We rely too much on too few taxpayers."
Nearly half of the tax take is personal income tax and nearly half of that, in turn, is from people in the top tax bracket ($70,000 plus since October).
Meanwhile, for the bottom half of households, ranked by income, net taxes (taxes less transfers received) are negligible or negative, according to the Treasury's briefing to its incoming minister. And many of those on middling incomes have very high effective marginal tax rates as Working for Families tax credits abate. The IRD reckons over 500,000 taxpayers face marginal rates of more the 40 per cent.
Combine that with the income gap which has opened up between New Zealand and Australia (or indeed most of the rest of the OECD) and "probably the most internationally mobile labour force in the OECD" and you have a situation where a large part of the tax base is globally contestable. It is vulnerable. It is at risk.
It is a similar story with corporate income tax, which generates an unusually high proportion of tax revenue (15 per cent of the total, not counting withholding taxes).
Company tax rates are trending lower internationally and New Zealand as a net importer of capital is exposed to that competitive pressure, in a world where multinational corporations have a lot of options about where they invest and how they financially structure those investments.
It is not just that the tax base resembles an iceberg heading towards the equator. It looks as if the taxes we rely on most are the ones which are more damaging to economic growth.
An OECD study last year, entitled Tax and Economic Growth, looked at the relative impact of four kinds of taxes on GDP per capita.
Worst in terms of impact on GDP per capita, it found, are corporate taxes, followed by personal income tax. The least distortionary thing to tax is immovable property.
"Particularly recurrent taxes on residential property," Christopher Heady, one of the report's authors, told the conference. "But that frightens politicians."
In the more demure language of the report, such taxes are "very unpopular in many countries" and tend to be the preserve of local rather than central government. But property taxes do not affect decisions to work, or to acquire skills and education, or to produce, invest and innovate, to the same extent as other taxes.
The tax treatment of housing is invariably distortionary compared with other investments. Imputed rents - the benefit owner occupiers derive from living in their investment - and many countries (though not, of course, New Zealand) allow a tax deduction for mortgage interest payments as well.
The McLeod tax review in 2001 recommended a wealth tax to fund the move to a lower and flatter income tax scale which it also favoured.
A wide range of assets including houses would be deemed to earn the same return as Government stock and that amount, minus the rate of inflation, would be taxed annually. In other words homeowners would be paying something like 1.5 per cent of the value of their properties per annum in tax.
This proposal - or rather just the sound of "tax" and "house" in the same sentence - elicited a Vesuvial reaction in talkback radio land and was politically dead within 24 hours.
Yet one can't help but wonder whether, if it had been adopted, this decade's housing boom would have been more muted and the associated build-up of debt less back-breaking.
Next best after property taxes, the OECD study found, are consumption taxes like GST. New Zealand's one-rate, no exceptions version of GST is widely regard as a model of efficiency for such taxes. The 12.5 per cent rate is one of the lowest in the OECD but the amount collected, relative to the size of the economy, is the fourth highest.
So does it make sense to raise the GST rate to fund a revenue-neutral reduction in personal or company income taxes? As is often the case in tax policy there is a trade-off between efficiency and equity. Such a change would make the tax system less progressive, shifting more of the burden towards the lower-paid. (At least in the short term; over a lifetime even the well-paid tend to spend most of their income.) So offsetting measures through the benefit or family
tax credit system might be required.
A higher GST rate might also increase the size of the black economy.
In principle energy taxes might be attractive. They intercept the economy across a wide front - meeting the broad base, low rate test - and deal with physical, metered quantities which makes them hard to avoid. They might even do the environment some good, by encouraging energy efficiency.
But transport fuels are already taxed fairly heavily and emissions trading seems to be the preferred way of introducing a carbon price into the economy. So perceptions the tax man was unfairly double-dipping would count against that approach.
Which brings us back to the taxation of housing. If you increase your wealth through the sweat of your brow you get taxed, and hard. But if you increase your wealth by owning the right house at the right time and place, that is supposed to be sacrosanct. Well why?
Appearing before Parliament's finance and expenditure select committee yesterday, English said he did not expect another housing bubble to emerge for some time, if only because the credit would not be there to fund it. In the meantime, he was sure there would be a debate about the tax treatment of housing.
"It's not our highest priority but we will engage in that debate," he said.