Cullen pours cold water on tax cuts this year

National Party Finance spokesman Bill English is surprised that Finance Minister Michael Cullen has already poured cold water on the suggestion he will cut taxes this year.

"Less than 24 hours after promising them, Dr Cullen is already sowing seeds of doubt. He's already looking for excuses to deny New Zealanders tax cuts this year. What new excuses will he dream up for rejecting tax cuts if Labour wins the election?"

Mr English is referring to comments made by Dr Cullen to NZPA, who said tax cuts this year would not go ahead if they posed a risk to interest rates.

"It's hard to reconcile that stance with Dr Cullen's track record. He was quite happy to push up interest rates so his Labour colleagues could spend more in last year's Budget."

Official papers show Dr Cullen warned his colleagues before the last Budget that their spending binge would keep interest rates higher for longer, and history now shows that is precisely what has happened.

"So we have a situation where Dr Cullen is happy to let interest rates rise when Labour is doing the spending – but he won't let workers spend their own money.

"Dr Cullen missed much better opportunities to cut taxes when interest rates and inflation were low, and growth was higher. He is actually the one who has helped create this interest rate rod for his own back.

"His comments today clearly cast further doubt on Labour's tax promises and suggest they may go the same way as the so-called chewing gum tax cuts.

"As long as Dr Cullen refuses to take any responsibility for conditions which have led to the second highest interest rates in the developed world, it's hard to see how he will deliver ongoing tax cuts that meet his four tests."