KEY POINTS:
The election tax-cut battle is heating up as Labour's long-awaited cuts take effect tomorrow and National prepares to unveil its opposing plan - perhaps as early as next week.
From tomorrow, workers will get between $12 and $28 more a week in their pay packets from Finance Minister Michael Cullen's first round of personal tax cuts.
The cuts are one of three income-boosting moves that Labour has timed to take effect weeks before the November 8 election.
Superannuitants also get a pay boost from tomorrow, and people who get Working For Families tax credits are in line for a bit of extra money in their pockets too.
Labour has legislated for further tax cuts in 2010 and 2011, and National says its programme will include an earlier second cut taking effect on April 1 next year.
It now appears National is considering going public with its tax-cut policy next week.
The Treasury will open the Government's books on Monday in the pre-election economic and fiscal update, clearing the way for National to unveil its financial plans.
It would be unusual if National did reveal its tax-cut plan next week, as the party is not officially opening its campaign until Sunday, October 12.
But Labour has made a pacy start to campaigning since Prime Minister Helen Clark announced the election date just over two weeks ago, and National has looked slow off the mark in comparison.
The fiscal update is expected to reveal a significant deterioration in the Government's position.
Forecast cash deficits will be much larger than predicted in May's Budget, and debt will be above Dr Cullen's target of 20 per cent of gross domestic product.
The forecasts have been thrown out by the weakening economy and because the cost of several Labour policies - including KiwiSaver and 20 hours' free early childhood education - have been pushed up as more people than expected take advantage of them.
National's finance spokesman, Bill English, yesterday accused Dr Cullen of "sitting on a spending blow-out" and trying to distance himself from it. "He's going to try to blame it on everyone else."
The tax-cut battle between Labour and National will be one of the dominant themes in the election campaign.
Labour will argue that National cannot responsibly promise bigger cuts because of the challenging economic outlook.
National will say it is aiming to boost economic growth and put the right incentives into the tax system so people are encouraged to work.
Squabbling continued yesterday between Labour and National over the size of National's planned tax cuts.
Dr Cullen suggested his opponent was backing away from previous indications of cuts worth $50 a week.
But Mr English said the cuts would be around expectations - which were about the $50 mark.
And he said the party's plan would take the economic outlook into account.
