Voters shun tax cuts for more money on services

Most voters want the Government to spend its spare cash on services such as education and health rather than on tax cuts, according to the latest Herald-DigiPoll survey.

The findings are a challenge to the National Party's election campaign, which has tax cuts as a primary plank.

The poll comes after the Herald revealed last week that the DigiPoll survey found the gap between Labour (47.7 per cent) and National (34.5 per cent) widening.

But at the same time, Finance Minister Michael Cullen is heading for a Budget round under sustained attack from Opposition parties about his operating surplus, which stands at $6.4 billion for the eight months to February.

The poll asked voters to choose various options for next month's Budget, which will show a surplus of tax over operating expenditure. Those choices were: tax cuts for all, spend more on services, tax cuts just for the low-paid, or putting the surplus money into the superannuation fund.

National says such a large surplus would create room for tax cuts.

Dr Cullen argues that because the operating balance reflects paper gains and losses, it is not the same as a cash surplus to spend.

He has foreshadowed changes to business taxes in the Budget, including the rules concerning fringe benefit tax and depreciation.

National finance spokesman John Key said yesterday that a National government would identify waste through a baseline review of all Government spending.

His party advocated less new spending than flagged by Labour, which would mean "a wide programme of tax relief will be possible".

National was "likely" to match the Government when it came to increased health spending, he said.

It could not promise there would be no cuts in education spending, where it was clear that money had been wasted, particularly in the tertiary areas.

Mr Key refused to concede that the poll was bad news for National.

He said a significant number of New Zealanders did not pay tax and the poll probably reflected a number of those people had been surveyed.

It indicated National needed to continue to expose how wasteful Government spending had been.

"But we'll leave voters to answer the question more fully when they see the extent of our tax package, when we show them the money [they'll save]."

Labour president Mike Williams said the question was complex because it worked on the presumption there was a surplus, which Dr Cullen had denied.

But that aside, the poll showed his party was reading the country's mood accurately.

"People are starting to see a connection between tax and good schools and hospitals," said Mr Williams.

"In general terms, it shows we're right on track."