Nats set for $50 tax cut trump <font size=1>(+graphics)</font>

National appears poised to trump Labour with tax cuts worth at least $50 a week to the average worker, as a new poll shows increasing living costs are driving up expectations.

Finance Minister Michael Cullen has talked down the prospect of big tax cuts in Thursday's Budget.

But today's Fairfax Media-Nielsen poll shows voters believe they need at least $50 a week more in the hand to make a real difference to their household budgets. Many say it would take an extra $60 to $80 a week.

An across-the-board tax cut of $50 a week would cost the Government about $5 billion. The $25 to $30 a week tipped for Dr Cullen's tax cuts would cost up to $3 billion.

The pressure on household budgets of rising food, petrol and housing costs appears to have fuelled expectations, with most - 47 per cent - saying they would use the extra cash to buy household necessities such as groceries or petrol.

But 30 per cent of those questioned said they would put the money into savings, while 25 per cent say they would use it to pay off debt.

Few would put it toward consumer goods such as a car or kitchen appliances, and just 6 per cent say they would put it toward a holiday.

Today's poll also shows tax cuts are rated more important than lower mortgage rates or higher Working for Families payments: 42 per cent favour tax cuts, 6 per cent want Working for Families boosted and 23 per cent say lower interest rates would make the biggest difference.

The findings heap more pressure on Dr Cullen, who will unveil his Budget this week. The poll gives National a 27-point lead over Labour.

Yesterday, National's finance spokesman, Bill English, promised ‘‘significant'' tax cuts under a National government - and leader John Key told The Dominion Post tax cuts were likely to be the defining issue at the next election.

Mr Key said National intended to offer ‘‘meaningful'' relief. Asked what would be considered meaningful, he replied: ‘‘North of $50.''

Mr English made it clear that them priority would be workers earning $60,000-plus - in particular those pushed into the top 39 per cent tax bracket by wage rises.

‘‘We need to keep faith with those people, that's our top priority,'' he told TV1's Agenda yesterday.

Mr Key acknowledged it would not be possible to meet everyone's expectations. ‘‘But what is different this time [from the last election] is New Zealanders are under enormous financial pressure and they need some relief from that pressure.''

The poll questioned 1091 people and had a margin of error of 3 per cent.

The Dominion Post