Unions chasing faster tax cuts

Michael Cullen

Labour has been told to bring forward its small tax cut planned for 2008 - by its ally the union movement.

The Council of Trade Unions said in its briefing to the new Government that it made sense to bring forward the first inflation adjustment to tax brackets from 2008 to next year.

The inflation adjustment, announced by Finance Minister Michael Cullen in the May Budget, was criticised because it was so small.

National finance spokesman John Key said yesterday the secret briefing paper obtained by National was an "embarrassing attack from within".

"Even the Labour Party's staunchest allies, the Council of Trade Unions, is secretly telling Michael Cullen to bring forward his miserly tax threshold tinkering.

"The CTU's previous opposition to National's programme for tax relief has been laid bare as nothing more than blind ideology. Secretly, they think Dr Cullen's got it wrong."

The briefing said the CTU was absolutely opposed to National's "huge and unfair tax cuts" as they carried massive risks for borrowing, inflation, interest rates and public services.

"But we have been concerned that many workers now believe that the fiscal surplus is larger than it needs to be and this has given impetus to the case for tax cuts.

"We believe that it is important that the Government much more clearly explains the fiscal settings and indicators.

"We also believe that it makes sense to bring forward the first inflation adjustment to tax brackets from 2008 to 2006."

Tackled on the briefing by National MP Bill English in Parliament, Dr Cullen said it was nice to find somebody "who liked the indexation proposal".