PM short-changes voters with $10 offer, says Labour

David Cunliffe says an announcement of tax cuts - to kick in around April 2017 - is a real 'fizzer'. Photo / NZ Herald

National's election campaign tax cuts announcement has been labelled "a fizzer" by the Opposition after Prime Minister John Key and Finance Minister Bill English said it was likely to amount to only about $10 a week for most people.

Voters will have to wait until April 2017, and may not get a cut at all if economic conditions deteriorate.

After dangling the prospect of the cuts in front of voters in recent weeks Mr Key and Mr English said they had earmarked about $1 billion a year for them from April 2017, "providing economic and fiscal conditions allow".

Before the Government considered announcing the cuts it had wanted to ensure the books were firmly in surplus, its debt repayment plan was on track, and ACC levies were cut by up to $900 million a year.

The tax cuts would initially be funded by earmarking $500 million a year from the $1.5 billion a year increase in the operating allowance outlined in the Budget.

That would give a pool of $1.5 billion by 2017, $1 billion for tax cuts and the rest for repaying debt.

Mr Key, who lambasted Labour leader David Cunliffe over his patchy command of his own capital gains tax policy, yesterday could not give any further details on his own tax plan.

"We ourselves haven't decided what the structure of that might look like," he said.

EY (Ernst & Young) tax partner Joanna Doolan said: "The lack of detail ... and the long timeframe makes them [the tax cuts] nothing more than a maybe -- no one can bank on anything yet."

EY estimated $1 billion in cuts targeted at the lowest income earners would give someone on the minimum wage about $9.40 a week extra.

"Yes, this is modest, we all accept that," Mr Key said, but it was "a stark contrast" to what Labour was offering.

"When voters go to the polls on September 20 they can either vote for a Government that wants to reduce taxes and keep interest rates low or they can vote for an opposition that wants to add five new taxes."

Mr Cunliffe said the proposed cuts were "a fizzer".

"The National Party's dance of the veils ended up with a big reveal. And what it revealed is the hole in Government policy."

Mr Cunliffe said it was ironic that the new policy lacked detail.

"The same Prime Minister that's been challenging Labour on incredible levels of detail over the last week can't even tell us for sure what tax rates or thresholds he would change.

"It's in three years' time, maybe, if you're lucky, and if ... the economy doesn't fall in a hole. This is a joke."

New Zealand First leader Winston Peters called the cut "widdling in the wind. This is the desperation of a party just trying to stay ahead in the polls. It's just nonsense".

Greens co-leader Russel Norman also said the announcement lacked detail.

The money earmarked for the cuts would be better spent ensuring health and education spending kept pace with inflation rather than falling in real terms as he claimed it would do under National's fiscal plan.