Nationa''s much anticipated tax-cut policy was not quite as rosy as party leader John Key was painting yesterday, Polson Higgs tax partner Michael Turner said.
"Mr Key is putting a spin on the tax cuts, which include the ones introduced by the Government on October 1. That means that half of the cut is already there and he can't really claim credit for them."
National had clearly targeted middle-income New Zealand in its tax policy, Mr Turner said.
For those earning up to $14,000, there was no change from what was introduced on October 1.
People earning up to $40,000 would be no better off than under Labour.
The main change was for people earning between $40,000 and $48,000.
For those earning between $48,000 and $70,000 there was no change, although there would be some benefit from the introduction of a 21% tax rate on the first $8000 of income.
Those earning more than $70,000 would be 1% better off, he said.
Mr Key announced changes to personal income tax rates and thresholds, and the introduction of an independent earner rebate, in a speech in Auckland.
"In delivering personal tax reductions, I have also been determined to protect the vulnerable from the sharp edge of a recession. We have included in our package specific measures to cater for lower and middle-income New Zealanders."
The rebate was for income taxpayers with an annual income between $24,000 and $50,000 who did not receive any form of financial entitlements from the Government, such as Working for Families.
The rebate next year would be $10 a week and increase to $15 a week in 2010.
Mr Turner described the rebate as a "bizarre" way of bringing tax rates down and a way of providing a handout to people who did not have children.
Someone earning $44,000, with no children, would receive an extra $520 in the first year of the package, reducing that person's tax rate by 1.1%.
"Labour targeted middle-income earners with families through Working for Families. National is providing tax cuts for people without children. It will find some appeal with some - if they can understand it.
"Mr Key doesn't want to be seen reducing the Working for Families package. It would take political hard sell to cut that back in times of hardship."
Economic circumstances had forced National to trim its plans to reduce the top tax rate to 33%.
Instead, National would drop the top tax rate to 38c in the dollar next year and to 37c in 2010.
Mr Key said the longer-term plan for the income tax system was a simple three-tier structure with the highest rate at no more than 33% for income above $50,000.
"This is what we will work towards as future economic conditions allow. We will continue to target a top tax rate of 36c and then lower, towards 33c over time, subject to economic conditions.
"I make no apologies for sending a clear message that National values enterprise, hard work and people getting ahead under their own steam."
Mr Turner said the message was that the tax package was not as attractive as it was being painted.
Although Mr Key said he wanted to get to a 33% tax rate, the top rate was still 37% in 2011-12.
"It will be a while before it gets back to 33%," Mr Turner said.
