New Zealand cancels tax cuts in recession budget

The New Zealand government today cancelled promised tax cuts over the next two years in a recession budget aimed at preventing debt from spiralling out of control.     

Prime Minister John Key promised the tax cuts in 2010 and 2011 before last year's election, won by his centre-right National Party after nine years out of power.     

But Finance Minister Bill English told parliament that the global recession brought on by the financial crisis had transformed New Zealand's prospects.     

"The world has moved very quickly from the best of times to the worst of times," he said.     

"Ten years of economic growth and expansive appetites for debt and government spending have ended."     

 

The government will also suspend annual payments which this year totalled $2 billion into a fund to help pay for universal pensions for the country's baby boomers, and these are not forecast to resume until 2020.     

Key said the budget tried to balance helping New Zealanders through the recession while preventing debt from blowing out.     

"The budget puts in place policies that will help ensure that the New Zealand economy emerges strongly from the current recession and provides a platform for strong growth, higher incomes and quality public services," he said.