National card calls for tax cuts

National has launched a postcard campaign calling for tax cuts as Finance Minister Michael Cullen blames "the temptation to splurge" and journalists for bad publicity on the issue.

Party leader Don Brash said 760,000 households in Auckland, Hamilton, Wellington and Christchurch would receive the card highlighting National's pledge to deliver tax cuts through "wise borrowing" and prioritising spending.

"If National had written the 2006 Budget, 85 per cent of Kiwi taxpayers would now be paying a top rate of 19 per cent or less," the card says.

The campaign will cost $90,000, paid from the taxpayer-funded Leader's Budget.

Dr Cullen has been criticised by some for saying tax cuts are not affordable without cutting services or investment.

He hit back yesterday in a speech to a superannuation and investment conference, saying industry and the Government faced similar problems convincing people of fiscal prudence in times of economic good weather.

Six years of strong economic growth had left the Government's books in a strong state, leading to calls for a spending splurge in the form of tax cuts.

"Prudence fatigue is the condition that sets in five or six years into a sensible plan for achieving financial security, once a few initial milestones have been passed.

"It is the temptation to splurge, or to take an extended savings holiday, as soon as one starts to feel that financial security could be within one's grasp."

Poor reporting from some sections of the media was also partly to blame.

"It is certainly frustrating that some portions of the media happily dumb down their coverage of the issue to give the impression that tradeoffs do not exist."

National's finance spokesman, John Key, said the speech showed Dr Cullen was out of step on tax cuts.

"Dr Cullen should be looking at himself, not blaming everybody else for his failed Budget."

Dr Cullen said that despite the "prudence fatigue", most people supported the Government's overall objectives. However, they struggled to make the short-term sacrifices needed to achieve them.

"The truth is that long-term savings, like prudent fiscal management, can be a hard sell. The end point sounds attractive, but the short-term sacrifices required are not."

Mr Key said Dr Cullen was under pressure to justify the lack of tax cuts and had decided instead to shoot the messenger.

- NZPA