Budget tax cuts, family support increases pass with support of all but Labour

Green Party co-leader James Shaw and Labour's finance spokesman Grant Robertson. Photo / Jason Oxenham

The Budget's $6.5 billion a year tax and families package has passed into law with support from all parties but Labour.

The bill was passed under Urgency and provides for tax cuts of up to $20 a week for workers earning more than $14,000 a year and increases in Family Tax Credits and the Accommodation Supplement.

Those are scheduled to kick in from April next year. The tax cuts package is worth about $2 billion a year while the Working for Families and Accommodation Supplement increases will cost $300 million to $400m a year.

The Green Party and Labour took different positions on the bill - the Green Party co-leader James Shaw said it was a line call. While the party did not support the tax cuts, the changes to Working for Families and Accommodation Supplement would benefit about 50,000 children in severe hardship and the party could not ignore that.

However, Labour leader Andrew Little said Labour would not support it because the tax changes were poorly directed and gave too much to higher income earners rather than those on very low incomes.

Labour said those at the top would get $20 a week in tax cuts but many at the very bottom of the income scale would get nothing.

The tax cuts will only affect those who earn more than $14,000.

Finance Minister Steven Joyce said of most of those who would miss out were single people who lived in areas where rent was affordable. Those people might have qualified for the Independent Tax Credit of up to $10 a week, claimed by 80 per cent of those on incomes lower than $48,000.

Labour has accused National of putting it up as an election bribe to voters, and said it would put up its own rival package soon.