Paul Goldsmith says National's tax cut plans wouldn't necessarily mean cuts to public services

National MP Paul Goldsmith is defending his party's tax plans after concern key services will be cut to pay for it.

If elected National has promised to adjust tax brackets to account for inflation between 2017 and 2021. 

The party would also scrap the new highest tax bracket of 39 percent for income over $180,000 a year, bin the extension of the bright line test and reintroduce the ability for landlords to deduct interest costs from their tax bills.

Speaking with AM on Friday Goldsmith hit back at accusations his party's policy would see key services such as mental health support cut. 

When questioned by AM co-host Melissa Chan-Green over how Kiwis could feel confident essential services wouldn't suffer under the policy, Goldsmith said people are actually paying more tax than they need to. 

"When you're talking about tax relief, that's just about adjusting the inflation rate so people are not actually paying more tax because of the high rates of inflation," Goldsmith said. 

"So not taking more tax by sneakily using inflation to put higher tax rates through is what we're proposing," he said. 

When Chan-Green said changing tax rates would mean the Government is making less and therefore would need to cut services, Goldsmith said not necessarily. 

"Oh no, no, no, not at all. Actually, the Government is gathering more taxes than ever at the moment. 

"They're raking it in and just taking slightly less and putting more back in the hands of New Zealanders doesn't mean you have to stop investing in public services.

"And of course, the fundamental difference is announcing spending is not the end of it. Actually, it's the actual use of the money effectively to have differences on the ground."

The National MP's subtle dig at the Government didn't go down well with Labour MP Michael Wood who was appearing on AM with him. Wood took aim at the Party in response, accusing its policies of heavily favouring wealthy Kiwis. 

"Paul conveniently forgets to add the lion's share of National's tax cuts would go to the wealthiest New Zealanders," he told AM co-host Melissa Chan-Green.

"That's just nonsense," Goldsmith interjected. But Wood jumped back in saying, "No, it's not". 

"It's absolutely right. The cut to the top tax would give Christopher Luxon, if he were the Prime Minister, an $18,000 tax cut. Paul, if you were a Cabinet minister in a Luxon Government, you'd be getting a $12,000 tax cut. At the same time, we face the challenges to public services," Wood added. 

But it didn't go down well with Goldsmith who repeatedly interjected saying, "That's just nonsense" and "No, no". 

The conversation then moved on before Goldsmith could elaborate on what part of Wood's statement he took issue with. 

It's not the first time the party has been forced to defend its tax policy. Leader Christoper Luxon addressed concerns it would benefit wealthy Kiwis more on AM earlier in the week. 

"The major component of our tax policies that we've announced this year is to say, 'Let's just take the inflation, the thresholds that exist for tax today and then move them up by the amount of inflation'," Luxon told Chan-Green

"That means for someone on the average income, they're going to get about $800 to $1000 per year just by making sure that we inflation-adjust tax thresholds."