KEY POINTS:
Michael Cullen's Budget today is almost certain to cut company tax from 33 per cent to 30 per cent, but the rest remains a mystery.
The Finance Minister has been enigmatic when answering questions about the content of the Budget - his eighth - leaving questions over whether he still has something up his sleeve.
National MPs quizzed Cullen over tax cuts and KiwiSaver in Parliament this week, but made little ground.
National's finance spokesman Bill English tried to find out whether Cullen would be giving tax incentives to make workplace-based savings more attractive.
English speculated that a person on the average wage of $45,000 would have to save $34 a week to get an $11 tax break.
Cullen replied: "That is a very interesting question."
The cut in company rates has been well signalled, as have other sweeteners for business, which are predicted to cost $1 billion a year when they come into effect next year.
The Government has ditched the idea of tax credits, but it will still be giving money to encourage exports and research, and to increase skills.
Substantial personal tax cuts have been ruled out because of the risk of them fuelling inflation.
Even if Cullen wanted to make cuts - and he has never shown much inclination to do so - he says putting cash into people's pockets would only keep interest rates higher for longer.
But there may be some personal tax relief elsewhere in the Budget through confirmation of plans to adjust tax brackets for inflation.
In 2005, Cullen's offer to increase the level of earnings at which people moved into higher tax rates was met with almost universal derision and since then he has refused to say whether he will go ahead with the move.
If he does not address the problem now, someone will have to eventually, or most of the workforce will end up in the top tax bracket.
Indexing the thresholds had been estimated to put between $35 and $534 a year into taxpayers' pockets and would cost $360 million in 2008-2009.
Among other areas the Budget may target is the workplace savings scheme, KiwiSaver.
New Zealand First Leader Winston Peters suggested there would be some sort of tax incentive for people joining KiwiSaver, but Cullen has kept his mouth closed on the subject.
Many Labour supporters are hoping Cullen has some surprises up his sleeve.
Labour has been struggling in the polls, and the last thing it needs now is to look like it has run out of ideas.
Cullen has said that whatever he presents will not require a huge outlay of cash - just enough to "keep things ticking along".
The big ticket items will be health and education as the money can be absorbed in these areas without causing a ripple.
Cullen's Budget will be similar to his past seven, devoting a lot of time to explaining how the Government has more money than it expected and why the economy has not gone as badly as Treasury predicted.
Numbers out last week showed the operating surplus was running well ahead of forecast and the Treasury is likely to lift its end of year forecast to a surplus of $7 billion or more.
Cullen's cash surplus - what he has left after spending, investments and loans - was also up to $2 billion.
So while he has cash to spare, much of the Budget could be an explanation of why he can't do anything much until next year - election year.
- NZPA
