Christopher Luxon says the Government's petrol tax cut is "good relief" but doesn't solve the much wider cost of living crisis.
On Tuesday the Government announced it is slashing 25 cents per litre off fuel tax and halving public transport costs for an initial three months to help ease the financial pressure at the petrol pump.
The tax reduction - expected to cost $350 million - will save motorists $11-17 per average fill-up, depending on the vehicle. Halving the cost of public transport - expected to come into force from April - comes with a $25 million to $40 million price tag.
Other Government measures previously announced are also set to kick in, such as an increase to the benefit, minimum wage and Family Tax Credits in April, and the Winter Energy Payment in May.
It comes after Prime Minister Jacinda Ardern finally admitted the cost of living was a crisis after refusing to do so for a week.
Speaking with AM on Wednesday Luxon said it will provide some relief but won't address increasing food prices or rent.
"From our point of view the petrol tax tweak is good relief, it's going to be some relief but what we are dealing with here is a much wider cost of living challenge and it's not just at the pump. It's also with food being up 13 percent, with rents being up $150 a week, so there is a whole raft of actions that are really needed by this Government to deal with what's a very broad set of challenges that are driving this cost of living crisis."
The National Party leader said his plan to adjust tax brackets to meet inflation would address the wider challenges faced by many.
"This is giving some relief in the petrol tax space which is important… but the bigger issue is that there are a lot of things going on in this broader economy that we have to lift our sights up and say, 'Well what's driving this cost of living crisis?'.
"Petrol is a piece of it but certainly food is a challenge, rents are a challenge and some sort of broad-based inflation-adjusted tax relief for everyone is actually a really good idea of very quickly getting cash to people."
The National Party is proposing increasing tax brackets to meet inflation to stop low and medium-income earners being trapped in higher brackets.
Currently Kiwis are taxed 10.5 percent on each dollar earned up to $14,00 a year, 17.5 percent for $14,000 to $48,000 a year, 30 percent for $48,000 to $70,000 a year and 33 percent for $70,000 to $180,000 a year. Labour also introduced a new tax rate in 2020 of 39 percent for income over $180,000 a year.
Under National's plan the lowest 10.5 percent tax bracket would increase to $15,600, the 17.5 percent bracket would go to $53,500, and the 30 percent bracket would go up to $78,100.
This would mean people earning $45,000 would save $112 a year, someone earning $55,000 would save $800 and someone earning $78,100 would save $1043.
National would also remove the top 39 percent tax rate for income over $180,000 a year which Labour introduced.
National's tax cuts would see Luxon receive an $18,000 income tax reduction if he became Prime Minister.
The Government on Wednesday morning hit out at National, accusing it of "crying crocodile tears about the cost of living".
"National is pretending to care about those doing it hard, yet it is planning to target tax breaks to the highest earners, rather than those most affected by rising prices," Revenue Minister David Parker said.
"We have given real support to those on middle and lower incomes helping them make ends meet. We will always back the engine room of New Zealand - the people who drive the economy - as well as properly fund health, education and the other essential services we all maintain by paying our fair share of tax."
It comes as Finance Minister Grant Robertson said the Government on Thursday aims to pass the Taxation (Annual Rates for 2021-22, GST, and Remedial Matters) Bill, which finalises the limits on deductibility of interest expense incurred by residential property investors from 1 October 2021.
The policy was announced in March 2021 and is aimed at reducing investor demand in the residential property market.
"We want to level the playing field and make it easier for first-home buyers to secure a home, while also ensuring there are no obstacles to supply. There are exemptions for land businesses, property development and new builds from the interest limitation rules," Robertsons said.
"It also makes owners of new builds subject to a 5-year bright-line period, rather than the current 10-year period."
