Labour confirms $2.4 billion in higher taxes

Labour's budget released today confirms you can afford anything if you put taxes up enough, Treasurer Bill English said today.

"Dr Cullen is planning to take $2.4 billion more tax over the next three years compared to what National plans to do.

"His budget today confirms that all manner of spending promises can be afforded if you put taxes up enough. Every New Zealander earning more than $9,500 will be paying more taxes under Labour than they would under National.

"With that extra tax revenue, and by dipping into the country's surpluses and reducing the amount he's got set aside for future years, Dr Cullen can make his budget balance.

"But his budget is not credible because there is no acknowledgment of the pressure that the Alliance will bring for more spending. By the third year Dr Cullen has slashed the amount set aside for future initiatives by up to $1 billion less than National has allowed. The reality of government is that there are always demands for extra spending, let alone when you are sitting around the Cabinet table with the Alliance.

"The budget is also not credible in light of Helen Clark's announcement today that she would negotiate over tax increases if that was the price of Winston Peters' support.

"Helen Clark's willingness to trade away tax increases, which has been a core plank of Labour's campaign is astonishing. She should now explain to the New Zealand public exactly which of Labour's spending promises will be traded off to match.

"In any case, Labour's policies of higher taxes, repealing the Employment Contracts Act, and reversing the ACC changes will start to choke growth in the second and third year, so tax revenue will drop. This is a budget with all the trouble pushed into the third year," said Mr English.