Key and Goff spar over tax package

Last updated 05:00 12/07/2011

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Labour leader Phil Goff says most Kiwis would get a tax cut under his party's plan, but Prime Minister John Key has labelled a proposed capital gains tax as a "dagger through the heart of growth".

Yesterday Mr Key kept up his attack on Labour's tax package, which is due to be officially announced on Thursday.

Mr Goff, meanwhile, suggested Labour's plan would get the books back in surplus soon after National's.

"It's certainly not tax and spend ... It's to pay down our debt. We know we can't continue to accumulate debt and we're not going to sell off our assets as a one-off quick fix to try to cover that problem," Mr Goff said.

Labour has already announced a $5000 income-tax-free zone, which Mr Goff said would save Kiwis money.

Australian Prime Minister Julia Gillard announced plans at the weekend to extend their income-tax-free zone from $6000 to $18,000. The policy was introduced as Ms Gillard also introduced a carbon tax on the country's big polluters.

Mr Goff backed the Australian package.

"If we're closing the gap with Australia on taxation policy, we're not going about it the right way," he said.

Plans by Labour to announce a capital gains tax have been leaked, which Mr Goff said had led to a "very helpful" debate over tax policy.

The $5000 income-tax-free policy has been estimated to cost about $1.3 billion a year once fully implemented. Labour also plans to take GST off fresh fruit and vegetables, which would cost about $350 million. The capital gains tax, excluding the family home, would probably raise about $2b.

Mr Goff said Labour's package would take the country back in to surplus in "the medium term".

"What matters to the financial institutions in terms of your ratings is whether you've got a credible policy to pay down debt and to live within your means. Our policy will be very credible in that regard," Mr Goff said.

The National-led Government's projections are to return to surplus by 2013-14.

Mr Key said the country did not need another tax. "The answer from Labour is that if you are a top personal [income] taxpayer, your tax is going up, you're certainly paying more in capital gains tax and frankly, you're not welcome in New Zealand."

A "considerable number of changes" had already been made by the Government to deal with over-investment in property.

"Labour is actually fighting a problem they had when they were in office but not actually the problem that exists today."

Labour's package would not be fiscally neutral.

"I bet you they'll be out there spending more money. In the end, they only know how to do one thing, these guys, and that is tax the economy more and spend more."

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- The Dominion Post

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