KEY POINTS:
Associate Finance Minister Trevor Mallard has given the strongest signal yet that the Government will cut personal income tax in next year's budget.
In an interview with Melbourne's The Age newspaper, Mr Mallard said pressure was building for cuts.
"There is quite a strong view building in New Zealand that at some stage we want to do an income tax reduction," Mr Mallard said.
"I've got no doubt that it will be addressed in the next budget."
In the comments -- published last week -- he said he favoured changes to tax thresholds as the best way to cut personal taxes rather than dropping rates.
But Finance Minister Michael Cullen today said the comments were Mr Mallard's personal opinion.
"There is no formal government view on how to change the taxation system at this point," he told reporters.
"There's a lot of work to be done on that and I'll be doing that work between now and the next budget."
Dr Cullen has said the Government will consider personal tax reductions when economic conditions allow, but has stopped short of promising them in next year's budget.
"I would expect to be able to talk about them in the context of next year's budget and hopefully timetables around that as well," he said before last month's budget.
Dr Cullen is wary of injecting further cash into the economy -- or even signalling too strongly that may happen -- as an increase in spending could force Reserve Bank Governor Alan Bollard to raise the Official Cash Rate even further.
National Party finance spokesman Bill English today highlighted Mr Mallard's comments which he said undercut Dr Cullen's stance.
He said Dr Cullen had steadfastly refused to cut income tax and had attacked National's tax cut plans as unaffordable in the context of current government spending on public services such as health and education.
In last month's budget Dr Cullen axed planned income tax threshold adjustments set for April 1 next year.
"This is the clearest sign yet that Michael Cullen is on the way out," Mr English said.
- NZPA
