Key ruled out GST increase in 2008

During the election campaign John Key ruled out increasing GST.

Yesterday, the now Prime Minister said an increase was on the cards.

A recording of a Radio New Zealand journalist asking Mr Key about the election pledge has been posted by the Labour Party on website You Tube.

In it Mr Key was asked to rule out raising GST to 15 percent to cover deficits.

"National is not going to be raising GST," he said.

"National wants to cut taxes not raise taxes. We acknowledge the point that John Shewan (chairman of PricewaterhouseCoopers New Zealand) is making which is that there is a decade of deficits facing New Zealand unless we get it right.

"But that comes back to our core point. The fastest way to eliminate those deficits and get New Zealand back into surplus is to get New Zealand growing again."

Mr Key was asked if he would borrow more rather than pay taxes, he said governments would need to borrow in the difficult financial times.

"He's (Mr Shewan) talking about having to raise GST and the top personal tax rate maybe in five years time and what I am saying is if we do a half decent job as a government at growing our economy I am confident that won't be happening, that's not on our agenda."

Mr Key said he was asked a specific question and gave a specific answer.

"He also floated increasing the top personal rate to 45 percent, I said no and I remain of that view. No to cover deficits. At that point we hadn't considered GST as part of a tax switch."

National was also not breaking its campaign pledge to not raise taxes.

"We stand by that - we won't be raising taxes. We will be, overall, lowering taxes."

Mr Goff said it was clear cut case of Mr Key going back on his word.

"Before the election he promised not to raise GST yesterday he said he will... He has broken his promise it is a simple as that."

Mr Key's defence was just "semantics".

Finance Minister Bill English said National had never contemplated raising GST as a revenue earning exercise.

"It's come to the fore now a part of a comprehensive package to use a tax system to lift our economic prospects and lift people's incomes."