Prime Minister Jacinda Ardern says it is not the right time for the Government to be making tax cuts.
In a State of the Nation speech on Sunday National leader Christopher Luxon announced the party would cut taxes if in government.
He called for Finance Minister Grant Robertson to adjust the bottom three income tax thresholds at the upcoming Budget 2022 "to account for the inflation we've seen in the last four years under Labour".
The cost of living has increased by more than 11.5 per cent in the past four years.
The National leader said the Labour Government's "mismanagement" is "actively making things worse".
The rate of inflation in the December 2020 quarter to the December 2021 quarter was at 5.9 per cent — the largest annual increase in more than 30 years, according to a Statistics New Zealand report released in January.
Robertson said the Government had "no intention" of giving tax cuts.
"I think tax cuts right at the moment would be the most inflationary thing that a government could do."
Ardern made similar comments to Breakfast on Monday.
"What we've tried to do is increase the family tax credit, which actually means families on those low and middle incomes do get a boost in the support they get," she said.
"What the Opposition have proposed, they have not yet told us what they would cut to fund it. It's billions of dollars. Now if Covid has taught us anything it's the importance of having decent healthcare services and not least alongside all of our other services that we value.
"So either they intend to take on more debt or they intend to cut services and I think whatever they do alongside their plan they need to tell us what it is that will go."
The Finance Minister hit back at National's call for tax relief amid rising inflation.
Ardern claimed the proposal National had put forward would "more heavily benefits those who earn the most".
"We know with those costs of living increases, if you're on lower incomes, they hit you disproportionately. That's why we've said we want increases in the minimum wage. The Opposition have not supported that. We've increased the family tax credit, which on $55,000, a family would get more from that than they would from what the Opposition have proposed," she said.
"So we are taking those steps but we're doing it in a way to target it to those who need it the most because that's how we can also keep spending on health, on education, on all those services.
"Simply put now is not the right time for New Zealand to be making those kinds of cuts that would have a much broader impact on our debt track and also benefit the most well off."
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