Govt faces growing opposition to GST hike

The Maori Party has joined Labour and the Greens as opposition to the Government's plan to raise GST strengthens in Parliament.

Prime Minister John Key signalled on Tuesday an increase in GST, across-the-board tax cuts and rule changes to get more tax out of property investors.

He said the Government was "carefully considering" increasing GST up to 15 percent from the current 12.5 percent to fund personal income tax cuts.

Labour and the Greens immediately denounced the move, saying it would hurt low income families and would be used to fund tax cuts for wealthy people.

The Maori Party yesterday joined the chorus, with MP Rahui Katene saying it did not support an increase in GST and was considering how to deal with the situation.

The extreme move of pulling out of the confidence and supply agreement with the Government had not been ruled out, she said.

"We never take any options off the table, but we have a very good relationship with the National Party and we continue to talk to them," she said.

The Government continued to issue assurances that no one would be worse off because any GST increase would be balanced by cuts to personal income tax.

Prime Minister John Key said debate had focused on the top personal tax rate, but the Government had always been looking at the entire tax structure.

Mr Key and Finance Minister Bill English yesterday faced questions from the media and opposition MPs about the design of the tax package, but no details were disclosed and are not expected to be until the May 20 budget.

It has become clear that different versions are still being considered.

"You have to look at the whole package," Mr English said.

"The components include extending the tax base so you would be getting more tax out of the property sector and in the whole package there is the opportunity to ensure that people aren't worse off.

"Of course, we would like to see a majority of people better off."

Mr English said some people wanted to build the perfect theoretical tax system, but he had to deal with "messy reality".

"There's no point doing something big and bold which doesn't survive the next election," he said.