NZ Election 2020: Paul Goldsmith 'not surprised' Labour 'highly agitated' over National's proposed tax cuts

National finance spokesperson Paul Goldsmith has hit back at Labour saying his party's proposed tax cuts are irresponsible, responding that he's "not surprised" about the criticism.

"I'm not surprised that they're highly-agitated at the thought that any Government would put more money back in the pockets of New Zealanders," Goldsmith told Magic Talk's Road to the Election on Sunday.

National is promising to put "$3000 into the back pockets of average earners" with temporary tax cuts if elected.

By increasing the tax thresholds, it would mean someone earning $70,000 per year would save $3226 in the same period, while someone earning $50,000 would save $893. National said the cuts would last for 16 months.

Prime Minister Jacinda Ardern said on Friday the proposed cuts were "totally irresponsible" - however, Goldsmith disagrees.

"The economy is shrinking - these are pretty dramatic times and we've got to shake things up a bit," Goldsmith told Road to the Election host Mitch McCann. 

He said the best way to get some "excitement" back into New Zealand's economy was the short-term stimulus from tax cuts.

"That's the big difference between us and the Government," he said.

Ardern believes now is not the time.

"That's just not right and it is not the actions of a responsible party, let alone a responsible economic manager," she said on Friday.

National leader Judith Collins said New Zealanders need more money to put back into the economy.

"This will give Kiwis the confidence to go out and spend, which will be crucial for our retail, tourism, and hospitality businesses to survive this economic crisis."

Collins said New Zealand was in for a "tough year" in 2021. 

Labour has proposed a new top tax rate in its policy announced last week, meaning those who earn above $180,000 would be taxed at 39 percent.

Goldsmith said National plans to focus its cuts on "the average earner" in New Zealand.

"That group is going to get about $3000 in hand and of course, if you've got a double income family, that's about $6000 - it will make a huge difference," he said.

"We think they deserve to keep more of their money and that's a good way of getting cash back into the overall economy."

Minister of Finance Grant Robertson agreed with Ardern and called the proposed cuts "irresponsible" on Friday.

The Government opened up its books earlier this week revealing it spent $4 billion less than expected on COVID-19, but debt is projected to reach $200 billion by 2024 - which as a share of gross domestic product (GDP) is 55.3 percent. 

Stats NZ confirmed on Thursday that New Zealand is now facing its worst recession in living memory, with a second consecutive quarterly loss - a 12.2 percent drop in GDP - reflecting the harsh March and April lockdown period. 

Goldsmith said National never considered "helicopter money" in its tax policy, a term used when Governments give away money in the hope people will spend it to boost the economy.

"We think the tax system is the best mechanism."