Katrina's fallout leaves tax plans intact

Neither National nor Labour is rejigging its tax policies in light of Katrina's likely effects on the economy.

Petrol prices have risen, bringing warnings of increased inflationary pressures, and insurance costs are expected to rise as well.

A spokeswoman for Finance Minister Michael Cullen said Katrina had not prompted a review of tax policies. "Treasury hasn't done any work on it at this stage."

National's finance spokesman, John Key, said the party's tax cuts, which would be phased in over three years, were predicted to provide only a small stimulus to economic growth, about 0.5 per cent - "in the margin of error category for most banks".

"If Katrina and oil continue at these levels then the general view of economists is that it will actually lower growth.

"In fact it [National's tax-cut package] will happen at a time when the economy I think can sustain some stimulus.

"That's the reason we had such a phase-in approach, to ensure that it had very limited impact on the economy, and on that basis we don't see any reason to be rethinking it."