NZ First promises to drop tax rate for small businesses

New Zealand First is promising to cut the tax rate for small businesses from 28% to 20%, costing about $1 billion a year, if elected.

The reduced rate would apply to companies with a turnover under $30 million.

The party described this as a “much needed bold step” that would leave small operators with more cash to invest in employees and expanding the business. It also reduced their reliance on bank debt.

“This will be more than covered in the medium term by more companies collectively paying a lower tax rate, higher employment, a growing economy, and more spending,” the party said in a statement.

“This is about moving away from policies that give short-term sugar hits to consumers and move towards proper long-term investment in businesses that will grow our economy and increase productivity, increase labour demand, employment, and wages.”

Tax reform is a centrepiece of this election amid public attention fixed on the cost of living and the economy.

Labour has promised a Capital Gains Tax while National and Act have both promised no new taxes, if elected. Te Pāti Māori has proposed five new taxes, including a wealth tax, and an income rate shake-up which it says would lead to the vast majority of New Zealanders paying less income tax.

The Green Party has also proposed a form of wealth tax and a boost to Inland Revenue to further scrutinise money being sent out of New Zealand.

The Opportunity Party also has a broad tax plan which includes rural and urban land, and an increase to income tax.

Julia Gabel is a Wellington-based political reporter. She joined the Herald in 2020 and has most recently focused on data journalism.