Labour and Taxes

Labour's backtrack on high taxes shows Dr Cullen has learned something about politics - but he still has no understanding of economics, Finance Minister Rt Hon Bill Birch said today.

Dr Cullen's statement Labour may be prepared to do away with its higher tax policy shows the party is being rattled by political polling.

"That's a lesson anyone should have learned a long time ago.

"Despite Labour and the alliance continually campaigning against tax cuts, New Zealanders understand the benefits of lower taxes. At the last election, lower-tax parties won 70 of Parliament's 120 seats.

"Labour and the Alliance don't want to be seen as high-tax parties because of this. Dr Cullen says 'you can't go into an election saying there are going to be large tax increases to any income level'.

"The problem for Dr Cullen is that once again he thinks he's too clever for the electorate. It's one thing to say you won't put taxes up, but if your party wants to be a big spender in government the choices are simple - more borrowing, or higher taxes.

"This Government's approach is to cut taxes, pay back debt, and focus on controlled, high-quality spending.

"That is why we will not only lower taxes this July but continue to do so as conditions permit.

"Lower taxes increase household incomes, give a greater return and incentive for paid work, and help to drive economic growth."

The Coalition was still waiting to hear Labour say that spending more money wasn't its answer to every issue, the Minister said.

"It's simple. If Labour doesn't want to be the high spending/high tax party, then it will be the high spending/high debt party.

"The fact is that Labour is well behind the times on this debate and still has a heartfelt desire to, in Dr Cullen's words 'clobber those at the top'.

"It would be interesting to know how Labour reconciles its anger at anyone earning more than the average wage with its hollow vision of a high-skilled, high wage economy," Mr Birch said.

"This Government, by contrast, wants all New Zealanders to be able to increase their incomes - and that opportunity comes from paid work and lower taxes."