KEY POINTS:
In the two years since John Key took over from Don Brash as National's leader and dragged his party much closer to the centre of the political spectrum, there have been frequent complaints that National's brand has become little more than "Labour-lite".
Such talk of "me-too" carbon-copy policies and Labour and National being "Mother Coke and Father Pepsi" went right out the window this week.
National's tax policy has transformed an at-times-foggy divide between the two major parties into an obvious ideological chasm.
That's to Labour's advantage on the eve of the formal election campaign. After months of deliberately lying low on policy details, National has finally been obliged to put its head above the parapet. The policy shows that Key does stand for something. At last, Labour has something substantial to shoot at.
Despite the scaling back of some of the reductions at the top end because of ever-tightening fiscal constraints, National's policy remains unashamedly centre-right in ethos.
Take the cutting of the top 39c tax rate to 37c. That means someone on $100,000 would get a weekly tax cut of close to $70, rising to nearly $89 for a $150,000-a-year salary.
Someone on the average wage of nearly $48,000 would get a tax cut of about $47 a week by April 2011.
But that drops to $41 if they are getting income top-ups from the Working for Families programme - only $9 more than Labour is giving them.
A family on $40,000 will get just $22 a week extra. They are $10 better off under Labour. Under Labour, the maximum weekly cut anyone earning above $80,000 can get is $55.
Under National, the country's highest-paid public servant, Social Development Ministry chief executive Peter Hughes, whose salary is between $530,000 and $539,000, would get a weekly tax cut of $235. So much for sharing the sacrifice in hard times.
National MPs' "barely buys a block of cheese" mocking of Labour's cuts when they were pushed through Parliament after the Budget rings somewhat hollow.
Those on low incomes could at least buy a full block of cheese with Labour's cuts. They won't be able to do so with the extra sum National is offering them.
We have not even begun talking about National's $3 billion raid on KiwiSaver to pay for its tax cuts, which would leave many low- to middle-income savers far worse off in terms of entitlements.
The tax policy is being sold variously as a pump-primer for a sagging economy, a way of stopping the drain of talented New Zealanders to Australia, and an added incentive to go out and work.
But the underlying driver is clearly ideology. When it comes to ideology, tax policy is fundamental. The package is therefore probably the best indication yet of the ideological flavour of a Key-led Government.
It suggests that despite giving the impression of caution and pragmatism, it will not be tied to Labour shibboleths and is willing to alter or abolish policies and programmes Labour has deemed untouchable, even though there may be big political risks in doing so.
That is evident in the axing of employer tax credits from KiwiSaver, the consequent halving of employer payments into KiwiSaver accounts and National's intention to let employers pay more to workers who are not in KiwiSaver.
National's risible assurances that the latter will not result in employees effectively ending up paying for both their own and their employers' contributions is at best naive and at worst downright cynical.
The changes amount to a kick in the guts for KiwiSaver. The scheme will become far less attractive to employees.
National always had problems with the employer side of the scheme. It insists it is otherwise committed to KiwiSaver. But having almost sawn through one leg of this three-footed stool - despite indicating it would not - National's commitment has to be questioned.
More so after it was rumbled by the Council of Trade Unions, which found in the fine print that Government contributions would be reduced for those earning between $26,000 and $52,000 and who have been paying 4 per cent of their salary into the scheme.
Not surprisingly, National looks to be copping a backlash - justifiably, as thousands of people would have signed up to KiwiSaver after Key's assurances that any changes to the scheme would be modest.
This illustrates the dangers of hanging back on releasing policy and then changing it at the last minute.
Above all, National appears to have heavily underestimated the appeal of KiwiSaver. Placed alongside its less than generous tax cuts to lower- to middle-income families, National may have miscalculated and written off a big chunk of that vote.
National is on stronger ground with its new independent earner rebate. But that, too, looks like a disguised attempt to destroy another Labour icon, the Working for Families programme.
The rebate gives $10 to $15 extra to singles and couples earning between $24,000 and $48,000 and who are not entitled to Working for Families payments, not on a benefit or not getting national superannuation.
This group had nothing in terms of tax relief from Labour in nine years until this month's tax cuts. It grates. It is therefore a politically astute move by National.
But the more add-ons or exemptions applied to income assistance schemes, the more unwieldy and internally inconsistent those schemes become, thus allowing National to throw up its hands and say Working for Families should be axed and the entitlements delivered through the tax system.
All of this will be obvious to Helen Clark and Michael Cullen, who will be picturing their legacy being stripped away should National win on November 8.
National's tax package has added grist to Labour's defining of the election as being about trust - and Clark will hammer that theme when she launches Labour's campaign tomorrow afternoon.
The havoc in world financial markets has transformed the issue of trust into a question of who can be trusted to run the economy; now, she can also cite National's weakening of KiwiSaver as demonstrating that party's unsuitability for the task.
Why is National kneecapping a savings scheme which is showing remarkable success in remedying New Zealanders' appalling savings record?
Labour has barely begun to exploit this political gift from National. Just watch it do so over the four weeks until election day.
As the Government accounts are likely to end up being even more dreadful than the Treasury is forecasting, National could have demonstrated real leadership by announcing it was putting its tax cuts on hold until the economic landscape becomes clearer.
That would have been an audacious move, removing all doubts about National being fiscally responsible, silencing Cullen and leaving Labour nowhere to go.
And it would have answered those critics waiting for some beef to be put on National's rescue plan for the economy - something Key will have to address during his campaign launch which coincides with Clark's.
But National had become too wedded to tax cuts to pull back. It would have felt obliged to deliver them after arguing for them for so long. And for that, Labour is quietly, but deeply grateful.
