Govt readying to sell GST rise

Bill English. Photo / Supplied

National MPs will be out in their electorates in coming days selling the Government's tax cut and GST increase package to voters before it takes effect next month.

However, the Government says it will not be spending anywhere near as much on its campaign as the Labour Party leaflet mailout it has labelled as misleading.

Finance Minister Bill English yesterday released a Treasury document showing real after-tax earnings for those on the average wage would rise by 1.2 per cent following the October 1 tax cuts in spite of the increase in GST from 12.5 per cent to 15 per cent.

"After the October 1 GST-income tax switch an average income family will be about $25 a week better off, an average wage earner about $15 a week better off and a couple on NZ Super about $11 a week better off. These benefits will actually grow over time as wages increase," Mr English said.

A spokesman for Mr English said National MPs would be out in their electorates from next week selling the package. MPs would be handing out leaflets, paid for out of taxpayers' funds via the leaders' budget. The spokesman was unable to say how much it cost, but it would be "pretty minimal" compared with Labour's leaflets recently distributed to the public. A Labour spokesman said that campaign cost less than $80,000 which was paid for out of Labour's leaders' budget also.

Labour's campaign has been criticised as misleading by the National Government for exaggerating the GST increase.

The pamphlet gives examples of household costs increased by "National's 15 per cent GST" when the increase is 2.5 per cent.

Meanwhile, in the House yesterday Labour continued to challenge National's claim that the tax package will leave most taxpayers better off.

Leader Phil Goff said more than 400,000 taxpayers on lower wages would at best receive a net $5.70 a week tax cut that would be overwhelmed by higher rents, rates, ACC levies and early childhood care charges.

"When he says the vast majority will be better off, does he not really mean the top 10 per cent of taxpayers, who get 41 per cent of the tax cuts, will be a whole lot better off but the bottom 20 per cent of taxpayers, who get 2 per cent of the tax cuts, will be a lot worse off?" he asked.

But Mr Key repeated his claim that most people would be better off. "I point out that two-thirds of the entire tax cut package was applied to the lowest two rates."

Adam Bennett, additional reporting: NZPA