Key: Labour's tax plan 'nothing new'

Labour ditches GST plan for fruit and veges. Photo / BPT, Thinkstock

Prime Minister John Key says Labour Leader David Cunliffe's announcement this morning that Labour was dumping two key tax policies were "nothing new" and comments around rejigging the plan to lift the retirement age indicated internal tensions within the party's top ranks.

Mr Cunliffe said Labour had officially dropped its policies of having the first $5000 of earnings tax free and of removing GST from fresh fruit and vegetables.

The policies were adopted in the run up to the 2011 election under then-Leader Phil Goff but Mr Cunliffe's immediate predecessor David Shearer in his first major speech as leader almost two years ago indicated that the policies would be dumped.

"While these were worthwhile policies, we believe there are better ways to help struggling Kiwi families'', Mr Cunliffe said.

But Mr Key said Mr Cunliffe "hasn't done much over summer and he's obviously feeling under pressure to come out and say a few things".

"The problem is David Shearer already made those comments when he was the leader."

He said the GST off fruit and vegetables was "a pretty dumb policy anyway and wouldn't have worked.

Mr Cunliffe said the dumped policies would have cost the Government about $1.5 billion a year in lost revenue and that money would be better spent on polices that gave greater assistance to struggling families.

He would be outlining "Labour's vision for a better, fairer, more innovative New Zealand'' in his state of the nation speech on Monday.

Flagship policies of introducing a capital gains tax and a staged raising the NZ Super age of eligibility from 65 to 67 would remain, but would be tweaked.

The Super age policy was being reviewed to address issues of social and gender equality.
Mr Key said Mr Cunliffe's comments on the age of Super eligibility revealed "internal tensions within Labour".

"David Cunliffe doesn't want to raise the age of NZ Super because he believes it's stupid idea and that's what he's been telling the unions. (Finance spokesman) David Parker does, so they're going to come up with some sort of compromise."

Meanwhile Mr Cunliffe also said the media and public would have to "wait and see" whether he would announce on Monday that Labour would extend Working for Families to beneficiaries.