The great tax debate is set to ramp up on Thursday with the introduction of a bill repealing National's tax cuts to help fund policies such as Labour's free year of tertiary education or training.

Prime Minister Jacinda Ardern has given assurances that no one will pay any more tax than they pay now.

She told Parliament that 70 per cent of families with children will be better off under Labour's package, which boosts working for families higher than National would have.

She has also promised that her package will do better at lifting children out of poverty than the 50,000 that National's package would have.


National leader Bill English pointed to 1.2 million households that did not have children aged under 18 which could qualify for Working for Families.

He also said the abolition of tax cuts to people on the average wage, such as teachers, would pay for free tertiary education for the children of the wealthy.

"Why does the [Prime Minister] believe that it is fair to remove the tax reduction payable to a worker on the average wage in order to pay for my children to get a free year of tertiary education?" he asked in Parliament.

Ardern said the Government would be taking nothing away from income earners "because they have not received it."

It was not fair for her and English to receive a tax cut when should could prioritise 70 per cent of families in New Zealand "including the children that those teachers teach."

"And that, I believe, is what those teachers would want us to do."

National's adjustments of tax thresholds would have given a $10 a week tax cut to everyone earning more than $22,000 and $20 a week to those earning more than $52,000 a week.

Labour's alternative package was the centre-piece of its election campaign. It abolished the tax cuts, kept the accommodation supplement increases, and boosted Working for Families payments.


The legislation replacing National's tax and families package will be passed under urgency following the half yearly opening of the books by Treasury in the first big set piece by new Finance Minister Grant Robertson.

Bill English questions why teachers should forfeit tax cuts which were to take effect in April in order to pay for his kids' tertiary education. Photo / George Novak
Bill English questions why teachers should forfeit tax cuts which were to take effect in April in order to pay for his kids' tertiary education. Photo / George Novak

The Half Yearly Fiscal and Economic Update (HYEFU) will revise growth forecasts, which is expected to be a little less than Budget forecasts for the first couple of years but then higher than Budget forecasts.

The new Government's package is expected to add greater stimulus to the economy than National's package would have because it is targeted at middle and low income households, the latter of which tend to spend more of any increases.

The HYEFU is expected to contain Treasury's estimated costs of the policies that are part of the Government's 100-Day Plan.

But there will be no explicit costs of other policies, either in Labour's own Fiscal Plan or its coalition agreement with New Zealand First or its confidence and supply agreement with the Green Party.

The cost of those policies, including the promised $8 billion more for health over four years, will be pooled as part of the allowances set aside for operating and capital expenditure over the next four years, and will emerge in relevant Budgets.