National eyes tax cuts

Significant personal tax cuts by Christmas - that's National's promise if it is elected to Government.

Leader Don Brash, in a speech today to the party's last election year regional conference near Hamilton, is to signal a mini-Budget by year's end if elected.

Slating the Government's "tinkering" with future income tax thresholds, Dr Brash says National can do better.

"National will bring in a tax system that rewards enterprise, rewards skill and rewards hard work," his speech notes say.

"We will lessen the burden on thousands of middle-income families who, under the policies of the current Government, are taxed as if they are the new rich."

He is simultaneously promising to improve public education and health, saying the money is available and the problem is in the amount being sucked up by bureaucracy.

But Finance Minister Michael Cullen was scathing: "Large tax cuts will require big spending cuts," he said through a spokeswoman.

"Look foward to National's alternative Budget to find out where those cuts are going to be made."

National begins announcing new candidates today, as it prepares to compile its full list on Saturday.

The Herald on Sunday reported last week that high-fliers Te Maire Tau and Judith Ablett-Kerr had turned down places on the list.

National's finance spokesman John Key confirmed that an end-of-year mini-Budget would focus first on "meaningful" reductions to income tax, and would begin rolling them out immediately.

"It would be my hope that the mini-Budget would give a Christmas bonus to all working New Zealanders. The only caveat is if inflation tracks dangerously higher, but with growth expected to halve, that is likely to ease pressure."

He signalled the changes would be around all the income thresholds - the 21c, 33c and 39c tax rates.

While he dismissed speculation of a $2 billion cut to income tax, he did signal it would be costly: "Meaningful is not cheap."

Dr Cullen announced on Thursday that income tax rate thresholds would be pegged to inflation from 2008, meaning that those earning above $60,000 would only continue paying the top tax rate if their salary continued rising.

But National has slated the plan as insignificant, highlighting Dr Cullen's effective 67c-a-week tax cut for low-income New Zealanders.

Mr Key said National would help all working New Zealanders: "It's not an insulting 67c a week."

He confirmed that National's plans to slash $600m a year from the company tax take by reducing the rate to 30c in the dollar may not be rolled out until later.

The party has signalled one way to pay for tax cuts is to slash fat from what it perceives as bureaucracies, such as Trade and Enterprise NZ and various "hip-hop" grants schemes.

- HERALD ON SUNDAY