John Armstrong: Winner yet to be found in battle of tax schemes

Will John Key's chunky tax cut for those on middle incomes swing the election in National's favour?

Or has Michael Cullen taken the steam out of National's package by extending big income top-ups to working families on much higher incomes than Labour planned?

It is a complicated equation. As a Chinese Premier famously replied when asked by Henry Kissinger to assess the impact of the French Revolution, it is too soon to tell.

More polls are out this weekend. The gap will close. National is bound to get some lift from Monday's "big bang" announcement.

But Labour's last-minute upping of its threshold for "tax relief" may yet be its saviour.

National must win the battle over tax to win the election. Labour only has to make sure it does not lose it.

In order to hold its ground in middle New Zealand, Labour had to extend its Working for Families programme to quite well-off families because it is offering nothing to singles or couples without children.

In contrast, Mr Key had to make sure his cuts were big enough to woo those at the lower end of the middle-income range, not just the well-off.

This was a difficult exercise as big across-the-board cuts cost money.

National has gambled on enticing those earning more than $40,000, who will get an extra $28 a week. That drops to $11 for someone on $35,000.

Is it enough? Yesterday's Herald-DigiPoll has National slightly ahead of Labour for the first time in the $52,000 to $77,000 bracket where National would hand back between $28 and $46 a week. But Labour is ahead in the $33,000 to $52,000 range.

Of course, tax is not the sole economic driver of votes.

Labour still has a major underlying advantage. Nearly 54 per cent of respondents felt the country was on the right track, as against 38 per cent who thought otherwise.

Another complicating factor is Labour's student loans policy, which is clearly responsible for much of Labour's big lead. It was an instant hit, but Labour's extension of Working for Families drew a far more mixed response.

However, it filled the vacuum created by Cullen's Budget not delivering tax cuts.

The targeting means single-income families with one or two children earning up to $45,000 are ultimately better off under Labour. Those with three children need to be earning closer to $65,000 before National offers the better deal.

Labour's top-ups are substantial. They will take time to sink in. They may yet make the difference.