English's enthusiasm on tax cuts turns to more cautious tone

Prime Minister Bill English says everyone has contributed to surpluses by doing more with less. Photo/ Mark Mitchell

After talking up the likelihood of tax cuts this morning, Prime Minister Bill English somewhat curbed his enthusiasm for them after Cabinet.

He and former Prime Minister John Key have made it clear that there will be some relief package directed mainly at low and middle-income families in the May Budget, including a tax-cut announcement, but the detail and the timing of its introduction are still in the air.

"In a way, managing surpluses is harder than managing deficit because with deficits you just say No but with surpluses you've got choices and we've got choices," he said at his post-Cabinet press conference.

Asked whether Working for Families was in the mix, he said it was too early to consider that.

"We've got a number of priorities so before we get to that stage we have to make sure we have weighed up the need for investment in infrastructure, the pressures of growth of population on our public services, the Government's stated desire to reduce debt, having run up a lot of it with the recession and earthquakes, and now we are in better shape we want to get some of that debt down."

English also said there was some uncertainty about the cost of the Kaikoura earthquake and other natural disasters.

"These things can all add up."

Earlier, in a variety of regular Monday-morning media slots he said tax cuts would be "covered" in the Budget.

He also said any such cut measures would take effect next year, not this year.

"Most measures that you bring in to do with household incomes would follow the usual cycle which is if they are announced this year, they would start April 1st next year. "

Talking to Newstalk ZB, he said everyone had contributed to the surpluses.

"People have done more with less. They have contributed to this growth of the economy and we want to make sure everyone gets a share of it," he said.

But he also said "there's not going to be some big sugar shock with tax cuts."

Labour finance spokesman Grant Robertson said Labour was not planning to raise taxes if it led the next Government, aside from a policy, previously announced, to extend the "bright line" test from the current two years to five years, to target property speculators.

But the promise will not become unconditional until after the Budget.

Labour and the Greens are planning to issue a joint statement next week outlining the economic principles on which they agree, designed to pre-empt any scare campaign about Labour having to sign up to the Greens' more extreme policies.

Additional reporting: Nicholas Jones