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In an interview on TVNZ's Q and A this morning, Mr Key said while low income earners are not "racing ahead" they're doing better than they have been.
If tax cuts were to happen under a National-led government following this year's general election, they would be to the benefit of low to middle income earners, he said.
"I'd caution to say that we haven't designed a tax package yet, we have said there is a bit of free room there we could possibly use to give back to New Zealand."
"They're hugely expensive, and it's not going to be much."
Mr Key said he wouldn't rule out a corporate tax cut, too.
"Corporates want to be competitive. When they are competitive, they're investing. When they're investing, they're creating jobs."
However, he said businesses hadn't been "hammering" him about the need for a corporate tax cut, and thought current corporate taxes were about right.