Labour not buying govt's tax cuts line

The Labour Party is ripping today's Budget apart before it has been delivered, and it doesn't buy the government line that the tax cuts are a fair deal.

Prime Minister John Key says "really wealthy" people will probably find themselves paying considerably more tax because of changes to the property regime and the closing of tax avoidance loopholes.

Finance Minister Bill English says that "by and large" the high income earners will be paying higher effective tax rates on property.

"National is in overdrive hyping up this budget as fair for all and nobody loses out," Labour's finance spokesman David Cunliffe said

"Tell that to someone on $40,000 or $70,000 who are going to get $5 a week maximum out of this budget - and that's before you take into account their rent going up or those sneaky little price rises that come in on the back of GST, or the downstream inflation that causes."

Cunliffe said people are going to find out that someone on the prime minister's salary is getting an extra $350 a week, and the top private sector chief executives are getting $2000 a week more.

"Kiwi fairness is about spreading it around and allowing everybody to get ahead, not just the guys at the top getting further ahead."

Cunliffe said he didn't believe the government's claims that wealthy people are going to pay more tax.

"The main hit is only through rental property, and high wealth individuals don't get all of it from property income," he said.

"The fat cats with the corporate trusts won't be hit."

In Parliament yesterday Key faced questions from Labour leader Phil Goff about why people shouldn't envy rich people who are going to get even more money.

Key said those paying the top personal rate - which cuts in at 38%on income of $70,000 and is expected to come down to 33 - included skilled professionals like doctors, engineers and scientists who were critical to the economy.

"Those people are in demand all around the world and we need to have their careers here, and for them to be put to work in New Zealand," he said.

Goff said if the tax changes are going to be fiscally neutral, as the government says they will, then middle and lower income earners will get less.

Key said that wasn't the case.

"The good news for them is that they will be getting more," he said.

"The interesting thing is that someone earning $60,000 a year, with no children, who waited 10 years under a Labour government to get absolutely not a cracker, will be getting more in the budget tomorrow than he or she might expect."