Nats' tax cuts to be smaller than expected

National leader John Key says the party's planned tax cuts to be announced tomorrow will be scaled back due to the current economic climate.

Mr Key told journalists in Auckland that it would be irresponsible at this stage to proceed on the scale National originally envisaged.

Mr Key said New Zealand was facing three serious challenges: "A worsening international outlook, a recession and under Labour, little prospect of the conditions needed for long-term growth."

National was committed to ongoing tax cuts, but yesterday's opening up of the books with predictions of years of deficits had led to changes.

"We have made some changes to our tax package in light of the news Michael Cullen dished up in yesterday's pre-election fiscal update (Prefu)," Mr Key said.

"The thrust has not changed. But we are being realistic about what is fair and affordable in light of the mess Labour will be leaving behind it."

Following on from the Labour tax cuts of October 2008, National would still be making further tax reductions on April 2009, April 2010 and April 2011.