The Government moved immediately tonight to pass legislation scrapping tax cuts which were to come in during the next two years.
Finance Minister Bill English announced in the budget today the tax cuts planned for 2010 and 2011 had been dropped because they were unaffordable.
Parliament adjourned debate on the budget and put the House into urgency to debate the Taxation (Budget Tax Measures) Bill which, as well repealing the cuts, closes the mortgage diversion facility of KiwiSaver.
Revenue Minister Peter Dunne said the Government estimated scrapping the tax cuts would save it about $900 million a year.
"And that has to be seen as prudent fiscal management for difficult times," he said.
"As minister of revenue, I'm acutely aware of the need to ensure that our tax revenue remains sufficient to finance government spending on the essential services that New Zealanders expect."
Labour MP Clayton Cosgrove said his party supported the bill as it had consistently said tax cuts were "unaffordable, inequitable and wrong".
However, that did not detract from the fact National had broken its word.
"They went to the country and they said `you will get tax cuts'," he told the House.
"The great crime ... is not actually the fact that these tax cuts are going to be cancelled. The great crime is the great deception created by a government who used an election and bribed the people of this country and said over and over and over again that they would get their full tranche of tax cuts."
The bill passed its first reading unanimously and Parliament was debating its committee stages late tonight.
