New Zealand First proposes 20% tax rate for SMEs

The New Zealand First party has announced a campaign proposal to reduce the corporate income tax rate for small and medium-sized enterprises (SMEs) from 28% to 20%. The proposed cut would apply to companies with an annual turnover of less than $30 million.

The party argues that the reduction is necessary to stimulate investment, increase productivity, and encourage business expansion and employment. Citing OECD findings that corporate taxes can hinder economic growth by affecting capital formation, the party suggests the move will reduce reliance on bank debt and leave more cash available for reinvestment.

While the initial annual fiscal cost is estimated at approximately $1 billion, New Zealand First claims this will be offset in the medium term by increased economic activity, higher employment, and a broader tax base. The party noted that Australia has implemented similar measures and suggested New Zealand must remain competitive to attract innovation and growth.