Tax relief by threshold adjustments

Between them, Helen Clark and Trevor Mallard say tax relief is on the way but via adjustments to thresholds rather than personal tax cuts.

It is no more than has been foreshadowed in the past two weeks by Labour's support partners New Zealand First and United Future.

But Labour pointed to it in separate sections of Labour's conference in Rotorua. The Prime Minister acknowledged that Labour had concentrated on relief for families last election and that next it would be the turn of others.

But she sought to dampen expectations saying "there is rather more to running a country and leading a country than cutting taxes".

"We want to do it the Labour way so it doesn't mean slashing public spending, and it doesn't lead to everyone's interest rates rising."

In a remit committee attended by Finance Minister Michael Cullen and his chief associate minister, Trevor Mallard, delegates debated a proposal to index the lifting of tax-rate thresholds with inflation.

Mr Mallard moved a successful amendment to reconsider tax thresholds. Dr Cullen described the amendment as "useful".

Adjusting thresholds allows Labour to spread gains more thinly but to a wider number of people, avoiding being seen to give tax cuts to the highest income earners who pay 39c in the dollar on income over $60,000. If the income level where the 33c rate cut in was lifted from $38,000, those on that rate would gain - but so would those on the top rate.