Willis: Tax cuts not as inflationary as Government spending

National’s finance spokesperson Nicola Willis has defended her party’s push for tax cuts as a response to high inflation.

The latest round of Consumer Price Index (CPI) figures are due on Monday, and are widely expected to show another big increase in inflation throughout the economy.

Last time CPI figures came out, they showed an annual increase of 6.9%, which is the highest inflation has been for 30 years.

In an interview on Q+A with Jack Tame, Willis accepted that tax cuts would have some inflationary effect, as they would give consumers more money in their pocket.

But she contended that National’s plan wouldn’t push inflation as hard as current Government spending, citing Treasury research.

“Research over several years shows that tax reduction has less impact on inflation than Crown expenditure,” said Willis.

“It's our view that tax reduction would have meant that many New Zealanders would have used it to cover the bills, the increasing cost of yoghurt, that sort of thing, but others might have saved a little, and they certainly would have been very careful with how they spent that.”