National rules out tax cuts for four years: how its plan and Labour's compare on household costs

National released its costed fiscal plan on Monday, 12 October. It confirms there will be no income tax cuts in the next four years if the party is returned at the 7 November election, so households shouldn't expect a tax cut to lift their pay packets in that time.

Nicola Willis said now was "not the time to cut taxes", the NZ Herald reported. She said the plan offers "a pathway to potential tax relief for working New Zealanders". According to the Herald, the plan puts the government's books back in surplus in 2028/29.

Willis's pitch to households rests on borrowing costs. "Less debt helps keep inflation and interest rates down, which means lower mortgage and business borrowing costs," she said, as reported by the Herald. "That gives households more breathing room in their budget." That's her argument, not a promise. Mortgage rates are set by lenders, and the official cash rate is set by the Reserve Bank, not by a party's fiscal plan.

Labour's offer is more direct. According to 1News, its fiscal plan, released on 4 October, freezes fuel tax for three years and caps weekly public transport fares at $20 in Auckland, Wellington and Christchurch and $10 elsewhere. The fare cap would be paid for by redirecting 1% of the National Land Transport Fund. The costings table doesn't give a separate figure for the fuel tax freeze, so its cost is still an open question.

The money each side has left

National's plan leaves about $7.5 billion of operating headroom, according to the Herald. That's money not yet committed. Willis said it would go on "other cost pressures and new initiatives, including the usual yearly uplifts for areas like education and policing".

Labour's headroom looks bigger, at $10.4 billion. But the Herald reports Labour has to fund an estimated $8.5 billion in pay equity settlements out of that, which leaves about $1.9 billion.

Labour's costings show $24.5 billion of spending over five years, 1News reported. Almost $11 billion of new revenue would cover part of that:

• $7.7 billion from repealing Investment Boost
• $2.8 billion from a capital gains tax
• $365 million from reversing tobacco excise changes
• $100 million from other savings

Existing Budget allowances would cover the rest. Labour keeps the $2.4 billion operating allowance set at Budget 2026, the money set aside for new spending, and, like National, forecasts a return to surplus in 2028/29.

What else touches household budgets

The capital gains tax is the line most likely to affect property investors. 1News reported it would be a 28% tax on gains from commercial and residential investment property made after 1 July 2027, the date landlords and would-be buyers will need to plan around. The family home, farms, KiwiSaver, shares, business assets and inheritances would be exempt. Labour says nine in 10 New Zealanders would never pay it.

Labour's plan also includes $591 million for school lunches, 1News reported. No money is booked for 2030/31, which Labour says matches how the current Government accounts for the programme. There's $760 million in rent subsidies for 6000 new state houses, alongside $2.9 billion in capital for Kāinga Ora over four years.

Labour finance spokesperson Barbara Edmonds said every commitment was "fully costed and fully funded", RNZ reported. She said Labour was providing "real cost of living relief" for families.

Whose numbers to trust

Labour has already corrected one mistake. After the Taxpayers Union pointed it out, the party confirmed it had booked the reversal of changes to the Income Related Rent Subsidy and Accommodation Supplement as a $44.8 million saving when it was a cost, RNZ reported. That left the costings $89.6 million short and cut Labour's unallocated funding from $10.48 billion to $10.39 billion.

The bigger fight is over Investment Boost. Willis said official Budget costings put the policy's cost at $5.5 billion, leaving a $2.2 billion gap against Labour's $7.7 billion repeal figure. Edmonds said Willis was wrong because the policy cost is a net figure and the repeal revenue a gross one, RNZ reported. Before Labour's plan came out, a National "hidden bill" document claimed an $18.2 billion gap between Labour's spending plans and its capital gains tax revenue, according to 1News.

Voters can't get an independent check on either party's figures. The Treasury declined to assess the dispute. Under the Public Service Commission's election guidance, it "does not cost or comment on the policy proposals of political parties", RNZ reported.