Key says no to early tax cuts

Hopes of early personal tax cuts under a National government have been dashed, with leader John Key saying they probably will not start until 2010.

National has promised tax cuts in its first Budget if it wins power, and Key said yesterday that meant tax cuts from April 1 the following year.

That opens the door for Labour to promise to cut taxes earlier in Finance Minister Michael Cullen's next Budget, which would see cuts start from April 2009.

Tax cuts were a central issue of the 2005 election campaign.

Labour has come under growing pressure to move either on tax rates or adjust the thresholds at which those rates kick in.

Labour sources have made it clear they consider there will be room for tax cuts in Cullen's next Budget after he cancelled minor tax adjustments due to start next year.

Key suggested yesterday, before his first annual party conference as leader this weekend, that an early Budget was not on his agenda at this stage.

Asked if that meant a tax cut in April 2010, he said: "Yes, that's right. It could be that sort of distance away, notwithstanding any changes we might make.

"We have always argued about phased-in tax cuts, not a big-bang approach."

The Press