National announced on Tuesday it was to scale back its tax cut policy after a worsening of the Government's accounts.
"We've had an opportunity to digest the deteriorating Crown accounts, and we've also factored in to the situation that the worst of the economic slowdown hasn't been factored in to the Crown accounts that we saw yesterday," Mr Key said.
"On the back of that we have decided to scale back our tax package slightly."
In the pre-election fiscal update released on Monday, Treasury forecast a Government cash deficit this financial year of almost $6 billion. It said the operating deficit was $31 million this year and would worsen to $3.2 billion in five years time.
Mr Key says the party is committed to tax cuts if it becomes Government after next month's election.
He said under a National government, a worker on the average wage would still be about $50 a week better off.
"I can confirm that the indications that we gave for someone on the average wage, are broadly correct," said Mr Key.
Radio New Zealand's political editor says that figure that includes Labour's tax cuts which came into effect on 1 October.
National over-promised, says Clark
Labour Party leader Helen Clark says National's planned tax cuts would come at the expense of the workplace savings scheme, KiwiSaver.
She says the party over-promised on tax and is using the excuse of the books to try to talk down expectations.
Labour's finance spokesperson Michael Cullen issued a statement on Tuesday saying the nation "remains baffled" by Mr Key's announcement on tax.
"Mr Key's statement seemed to both promise a reduction in the party's initial tax cut package as well as the maintenance of it."