Labour wants to scrap the Investment Boost tax policy if elected into Government, with plans to target that support towards small businesses.
On Thursday morning, Labour unveiled its latest election policy, called 'Small Business Action Plan - A Fair Go'.
The policy pledges to make:
- Big businesses pay small suppliers within 15 days on invoices of $25,000 or less, and publish how quickly they pay their suppliers
- Lift the asset write-off from $1000 to $10,000 for businesses with an annual turnover below $10 million so small businesses can deduct the cost of new equipment from their tax bill
- Raise the GST registration threshold from $60,000 to $80,000 which Labour says would mean 35,000 of the smallest operators would no longer have to register for GST
Labour said it would pay for this policy by "refocusing" Investment Boost and the policy package was estimated to cost $1.56 billion over four years.
Speaking to reporters at the Kingston Service Station in Wellington, Labour leader Chris Hipkins said "we're targeting that support to those who need it the most: small New Zealand businesses".
"Giving a company chief executive a tax rebate when they go and buy a new BMW isn't going to grow the economy. Supporting small businesses will."
Labour finance and economy spokesperson Barbara Edmonds elaborated further, saying those that wanted to go into investment boost had until June 30, 2027, to do so. "There will be grandparenting rules which you have to work through, obviously, because some assets depreciate well over a year."
The investment boost tax policy was the centrepiece of the coalition government's 2025 ‘Growth Budget’ offering a $1.7 billion annual tax incentive for investments in productivity-enhancing capital assets. The policy allows businesses to immediately deduct 20% off the cost from their taxable income, and still claim depreciation on the remaining 80% over time.
This effectively brings forward the tax benefit and lowers the cost of investment by shifting some of the risks and opportunity costs from firms to the Crown. This encourages earlier and larger investment in productive assets than would otherwise occur. Treasury estimated in 2025, it will increase gross domestic product by up to 0.5% over the next five years and would carry a gross fiscal cost of $6.6 billion over the forecast period.
Asked about what Labour would do with money left over from the investment boost, Hipkins said Labour would set out the details of that in the party's fiscal plan.
Edmonds said Labour was focused on the majority of businesses in New Zealand, whether they choose to take it up or not.
"This proposal has come from small business ... This has definitely come from our stakeholder consultation, our discussions with small business right throughout the country. We believe that targeting it to small business, it shows we are backing them to grow.
If Labour's elected in November's election, the asset write-off would begin from July 2027 and the GST registration threshold would begin from July 2028.
Labour's small business spokesperson Dan Rosewarne said running a small business should mean building something of your own, "not spending your evenings chasing overdue invoices and filling in forms.”
“If you’re a tradie waiting months for a corporate to pay an invoice, a café owner replacing an oven, or a mechanic upgrading equipment, these changes are about giving you a fair go,” Rosewarne said.
“These are simple, easy measures a Labour government will take to support the small businesses that keep New Zealand’s economy ticking.”
National says 'this is a huge blow for small business owners'
National's finance spokesperson Nicola Willis said Labour was shrinking down the support for businesses.
“Scrapping National’s $6.6 billion Investment Boost to fund a $1.56 billion fig leaf means business owners lose the incentive to invest in genuinely transformative, productivity-enhancing equipment. It is nothing more than a $5 billion tax grab dressed up as a business policy."
Willis said "this is a huge blow for small business owners".
"While they might be able to purchase a laptop or two under Labour’s policy, they will find it a lot harder to buy a ute, commercial coffee machine or manufacturing equipment that could genuinely transform their business without Investment Boost."
Earlier in the year, Willis called for bipartisan consensus on the investment boost tax policy.
“My plea is one which is this is really good tax policy reform that’s good for the country. Let’s have bipartisan consensus, that we commit to it for the long term.”
“The point is that tax policy certainty needs to span successive governments.”
6 Comments
Cost $15.6b over 4 years.
I can't see that much cost wrack8ng up from the small business initiatives itemised. Raising the gst registration threshold should be pretty neutral because if unregistered a business cannot add gst to its product service cost and cannot claim gst component on input costs.
And lifting that asset writeoff to $10k wouldn't have significant fiscal impact either, I suspect.
So is the cost in the investment boot refocus? Noted absence of details as to the shape of refocus.
The 15 day mandatory payment of invoices is a good move, in theory. But how will compliance be monitored and non-compliance policed? Virtue signalling? Given the amount of outstanding tax debt (businesses using tax remittance non-compliance as a cash flow buffer), i can't see this effecting behavioural change in the civil commercial area.
Apologies, LouB! That should have said $1.56 billion over four years. That's been corrected!
Ohh that pesky, insignificant dot....🤣🤣
the asset write-off would begin from July 2027 and the GST registration threshold would begin from July 2028
Right so it will take 2 years for meaningful change, if they actually go ahead with it int he end and don't can it due to the need for greater tax take. All theatre and can't see this being implemented. With increasing costs and lower tax take currently it would require taxation to be recouped elsewhere.
What a shambles from all parties this election. Populasim, uncosted, dosnt add up, ignore facts - they are all as bad as each other across the board.
Hope a Count Binface stands so theres at least something that makes sense.
Not Binface...randomly selected citizens assemblies....bin the pollies altogether.
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