WELLINGTON (AFP) — New Zealand Finance Minister Michael Cullen announced tax cuts on Thursday in an election year budget aimed at reviving the flagging fortunes of Prime Minister Helen Clark's Labour-led government.
Delivering his ninth budget to Parliament, Cullen said the tax cuts would be worth 1.5 billion dollars (1.2 billion US) in the year to March 2009 and building up to 3.8 billion dollars in the year to March 2012.
The cuts would be delivered through reduced tax rates for lower income earners and raised income threshholds raised for higher earners.
Cullen said New Zealand families were looking for relief from the impact of rising food and fuel prices, and higher mortgage interest rates.
The tax cuts will be implemented in three stages between October this year and April 2011.
"At full implementation this will mean for individuals on a fulltime income, tax cuts of between 1,130 and 2,870 dollars a year or roughly 22 to 55 dollars a week," he said.
Higher fuel and food prices and high mortgage interest rates were among factors leading to a significant slowing of the economy in 2008, Cullen said.
"Economic growth in the year to March 2009 is expected to bottom out at 1.5 percent and take off to 2.3 percent in 2010 and 3.2 percent in 2011," he said.
Polls have shown voters are increasingly dissatisfied with Clark's government and this has been aggravated by the sharp slowdown of the economy this year.
A Fairfax Media-Nielsen opinion poll published at the weekend showed Opposition leader John Key's National Party on 56 percent and Clark's Labour on 29 percent.
Labour has been in government since winning the 1999 election but their prospects look bleak for this year's election, due to be called by mid-November at the latest.
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