NZ First promises business tax cut it says will pay for itself

Summarised by Centrist

NZ First is promising to cut company tax from 28% to 20% for companies with annual turnover below $30 million, claiming the resulting economic growth would more than cover the initial $1 billion annual cost.

The party says increased investment, employment and spending would recover the lost revenue in the medium term. The 1News report provides no supporting modelling or firm timeframe for that claim.

NZ First argues the cut would give smaller businesses more money to expand and reduce their need to borrow.

“A lower tax rate leaves additional cash available for reinvestment and reduces reliance on bank debt,” a party spokesperson said.

The party also argues lower company taxes could improve productivity and encourage new businesses in areas such as the entrepreneurial and innovative sectors.

“This is a much-needed bold step to encourage more investment by our small businesses that will create higher productivity, expand their business, and employ more New Zealanders,” the spokesperson said.

NZ First described the proposal as a move away from “short-term sugar hits” towards “proper long-term investment”.

Editor’s note: The central unanswered question is whether the additional economic activity would generate enough tax revenue to cover the reduction, and how long that would take.

Read more at 1News

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