Brash pledges tax cuts for everyone

National Party leader Don Brash promises that all personal taxation will be cut from next April if National leads the next Government.

The breadth of the proposed changes and the public confirmation of their timing are further fuel to one of the most fiery policy disputes in the lead-up to the election.

Finance Minister Michael Cullen described the promise as "reckless and unaffordable".

"More and more Dr Brash is looking like an old man in a hurry who does not care how much damage he does to New Zealand in his ambition to become Prime Minister," said 60-year-old Dr Cullen of 64-year-old Dr Brash.

Dr Brash confirmed last night that changes would be phased in and personal taxpayers would have some "relief" at the start of the new tax year on April 1 under a Government led by him.

But in a cat-and-mouse game with Labour, he is delaying announcing the details until closer to the election.

It is a decision that appears to be frustrating Labour.

The timetable for a promised cut in the 33c company tax rate to 30c will be foreshadowed at the time the personal tax changes are announced but it is not expected to be next year.

"There should be tax relief for all hard-working New Zealanders as of April 1st next year," Dr Brash said last night.

He said the post-Budget perception that National would introduce tax cuts to take effect before Christmas was wrong. The party had only intended that a Budget be passed pre-Christmas to legislate for them.

References by National finance spokesman John Key that he hoped for "a Christmas bonus to all working New Zealanders" had been a reference to news of cuts rather than delivery of them.

Dr Brash said Labour was using scare tactics to misrepresent National's position.

"They are trying to frighten New Zealanders into believing they can't have tax relief unless there are substantial cuts in Government spending and, frankly, that's not true.

"There is a lot of wasteful expenditure going on that can be eliminated without touching nurses, teachers or police officers."

He cited the example of Justice Minister Phil Goff saying National intended to abolish four weeks' annual holiday and the Cullen superannuation fund to pay for tax cuts.

"That's frankly quite dishonest."

National has reversed its initial opposition to the Cullen fund and plans to keep it.

It has also said that it would make four weeks' annual leave optional - an employee could take an extra week's pay instead.

Dr Cullen took issue with comments by Dr Brash on TV One's Agenda show at the weekend, citing an increase of 8000 in core public service staff over the past six years to 38,000.

Even eliminating all those workers would not pay for the kinds of tax cuts Dr Brash was talking about - "and he knows it".

"It is unbelievable that a former Reserve Bank governor should try to argue that such a massive loosening of fiscal policy will not lead to higher interest rates, especially given the bank's current unease about inflationary pressures.

"It's equally unbelievable for a former Reserve Bank governor to be arguing that a surplus at the top of an economic cycle can continue to pay for tax cuts year after year."

The tax-cut issue has dominated the pre-election agenda after widespread mockery of Dr Cullen's Budget measure last month to adjust tax thresholds in three years' time.

Meanwhile, Dr Brash avoided questions on Agenda about whether he would step down if National did not win the election.

Winston Churchill was 66 when he became Prime Minister of Britain for the first time and Ronald Regan was 70 when he became President of the United States and had two terms.

Said Dr Brash: "I don't regard myself as an old man at all."

National's timetable

* Any National-led government would offer "relief" for all taxpayers from next April.

* Don Brash is delaying announcing policy details until closer to the election.

* Promised company tax rate cuts from 33c to 30c are not expected to take effect next year.

* A Herald-DigiPoll survey last month found tax was the second major issue of concern for voters, after health.