Govt wants to rush through tax cuts

THE PRESS: The Government is preparing to rush legislation into Parliament locking tax cuts into place before the election.

Finance Minister Michael Cullen has confirmed he will introduce legislation on Budget night locking in his tax cuts, the size, shape and timing of which are being finalised.

The move comes as the latest Fairfax Nielsen poll puts National 18 points ahead of Labour, a five-point narrowing of the gap on February's Fairfax poll but still enough for National, on 52 per cent, to govern alone.

Cullen's move may be an indication that April 1 is the most likely date for tax cuts to kick in, although Cullen insisted that no decisions had been made.

But he effectively conceded that without legislation locking the tax cuts in place, Labour would be opening the door to National campaigning on a platform that voters cannot bank on Cullen delivering, while promising relief through bigger tax cuts of its own.

The so-called "chewing gum" tax cuts of between 67c and $10 a week promised by Cullen in his 2005 Budget were later canned after they were widely derided.

But the Government has had to weigh up the likely inflationary impact of tax cuts and is unlikely to bring them forward while there is a risk they might keep interest rates up higher for longer.

"We want to lock in those tax reductions so people can't say in an election campaign they're not actually there, whatever the date may be," Cullen said. "It's desirable to have a lead time on tax changes anyway, and if you're laying out a programme I think people want to know that programme is actually meant. If an alternative government wants to change that programme, of course, they require the votes in Parliament to do so."

With today's Fairfax poll showing Labour far behind National, the May 22 Budget could be pivotal in turning around public sentiment, as the Government dangles tax cuts as relief for struggling households.

The Government has been tight-lipped on the size, shape and timing of its tax cuts, although Cullen has signalled a three-year package.