New Zealand government dangles tax cut carrot ahead of election

New Zealand government dangles tax cut carrot ahead of election

WELLINGTON - New Zealand's ruling centre-right National Party on Monday offered the prospect of modest personal tax cuts within the next three years, a little under two weeks ahead of an election that polls suggest it will win comfortably.

The party said that if re-elected to a third three-year term in the Sept 20 vote, it would start saving for tax cuts to apply from early 2017.

"Any tax reductions will be modest, given the fiscal headroom available, and they will focus on low and middle income earners," Finance Minister Bill English said in a statement.

New Zealand has a graduated four-step personal tax rate system, ranging from 10.5 NZ cents in the dollar for low income earners, through to a top tax rate of 33 cents.

National has been campaigning on its record of strong economic growth, a return to budget surpluses and paying back debt, and has portrayed its spending promises as modest and responsible.

The annual budget released in May forecast a return to a small surplus in the year to June 30, the first in seven years, with limits on new spending to help reduce pressure on interest rates.

English said a re-elected National government would put aside NZ$500 million (S$522 million) in each of the next three years for tax cuts and debt repayments.

National, which currently rules in a coalition with three minor parties, has a commanding lead in opinion polls, with a Reuters survey of five major polls giving it 49.1 per cent support, compared to the main opposition centre left Labour Party's 25.2 per cent.

Labour is proposing a comprehensive capital gains tax, while the environmental Green Party wants to raise taxes for top income earners.

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