KEY POINTS:
National leader John Key was being reckless because he did not know whether his promise of tax cuts "north of $50" were affordable, Finance Minister Michael Cullen said today.
Mr Key has told The Dominion Post that National intended to offer "meaningful" relief by way of tax cuts.
Asked what meaningful meant, Mr Key replied: "North of $50".
This came after a Fairfax poll showing voters believe they need at least $50 a week in the hand to make a real difference to their household budgets. Some 30 per cent of voters wanted $60 and $80 a week in tax cuts, according to the poll.
The newspaper said an across the board tax cut of $50 a week would cost about $5 billion.
Dr Cullen said today Mr Key's promise to "out tax" Labour before he had any report on the Government's fiscal position or economic growth and revenue forecasts showed a "worrying recklessness".
He was surprised Mr Key would commit himself to a dollar figure before Treasury had opened the books.
"Mr Key has not yet seen up-to-date inflation forecasts, he has no idea what Treasury is predicting by way of economic or revenue growth in the year ahead and no idea if his $50 a week or more in tax cuts would result in higher interest rates for New Zealanders.
"He does not know if his proposed tax cuts are affordable and he does not know if the economy can absorb them," Dr Cullen said.
The finance minister has played down expectations of large cuts under Labour but has said the Government will provide some relief to households facing rising costs.
Dr Cullen said last week that it was "true that tax cuts cannot be huge, not only because a large tax cuts programme would be irresponsible fiscally, but also because the budget will make it clear that revenue is down on forecasts".
He also said tax cuts would be "as fair as they can be to all workers".
National's finance spokesman Bill English yesterday said on TVNZ's Agenda programme that it could afford "a significant tax cut".
He also talked about people on the average wage of $45,000 a year - who unless they had qualified for Working for Families - had had "nothing except the effect of inflation dragging more tax out of the average wage".
Mr English said that while tax cuts could be inflationary, these were not as inflationary as badly-directed government spending.
"I think if you look out over the next 18 months to two years almost anyone would agree that with the downturn in the economy, inflationary impacts of tax cuts are unlikely to be a big problem."
- NZPA
