The political bidding war begins on May 25 when Steven Joyce delivers his first and only Budget as a teaser for this year's election.

With the Government's books looking in better shape than it anticipated, there's bound to be some pork in the barrel, although perhaps not quite as much as there would have been if John Key was still around rolling it towards the ballot box.

His successor, Bill English, is more conservative on all fronts and having taken a Clayton's risk by indicating he'd like to raise the pension age to 67, he'll he digging up the tax cut carrot. But don't expect a bumper crop, he'll be looking more at the margins, where increasing wages have pushed workers into higher tax brackets.

Those margins will be moved, which will mean little to the top 3 per cent of income earners, those taking home more than 150,000 a year who pay 24 per cent of all the taxation loot rolling into government coffers every year.


Those at the other end of the scale will probably get help through the likes of Working for Families credits and accommodation supplements which in many cases see them getting more in credits than they actually pay in tax.

Going into this year's election, Labour is determined not to again be caught with its pants down as it has been in its last two outings.

It has dropped plans to raise the pension age and has shelved a capital gains tax which is widely seen as the most effective way to deal with the property speculators it seems determined to target.

With the relatively recent, so-called bright line test, those who buy and sell property within two years face a capital gains tax, anyway, so speculators are already facing the consequences of putting the blowtorch on the housing market.

That's not to mention the higher deposits they now must come up with.

To muddy the waters, Labour's Andrew Little's talking about cracking down on negative gearing which few people have a handle on anyway and probably even fewer understand.

Essentially it's where your payments on the mortgage and the upkeep of your property are more expensive than the money you receive in rent. You're basically borrowing to make a loss which has tax advantages and Labour reckons it shouldn't.

When you sell the property you also get the capital gain, providing you make the sale more than two years after you bought it.


But by making dramatic changes to negative gearing Labour could affect the very people it claims to represent: the renters who'll inevitably end up paying more as owners move to turn the negative into a positive.