'Broken promise' slammed

Tax cuts planned for next year and 2011 have, as expected, been deferred by the Government.

Releasing his Budget yesterday, Finance Minister Bill English said the Government believed in reducing tax rates.

High marginal tax rates were a cost to the economy.

They reduced incentives to work, to save, to invest and to take risk.

"However, the Government's revenue strategy must be re-evaluated in light of the contracting economy and growing debt we have inherited."

As a result, the second and third tranches of the planned tax cuts in 2010 and 2011 had been deferred until economic conditions improved.

Tax cuts introduced by the previous Labour-led government and by the current Government would be maintained.

Labour Party leader Phil Goff said the broken promise over tax cuts meant the most vulnerable New Zealanders would now get nothing.

Prime Minister John Key gave his personal guarantee to deliver tax cuts and he broke that promise, Mr Goff said.

"John Key and Bill English, determined to buy the election, made the promise and didn't care whether or not they could honour it. "This isn't a Budget for Kiwi battlers. It simply makes their struggle harder."

Deloitte Dunedin taxation partner Steve Thompson said there were no significant tax changes announced, except for the deferral of tax cuts, which was a foregone conclusion.

The balance of the tax changes dealt mostly with tax rate alignment for PIE's and residential withholding tax.

The KiwiSaver mortgage diversion scheme had been scrapped, but no-one would notice as it was hardly used, he said.