New Zealand First says it will campaign on cutting the company tax rate from 28 percent to 20 percent for every company with turnover under $30 million, a policy the party puts at about $1 billion a year in lost revenue at first.
The pledge was announced in a party statement on Thursday 24 September, six weeks out from the 7 November general election. It sets New Zealand First apart from its governing partners National and ACT, both of which have promised no new taxes but have not offered a company tax cut of this size.
The party called the change “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.”
It argued a lower rate “leaves additional cash available for reinvestment and reduces reliance on bank debt”, and that the $1 billion cost “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.”
New Zealand First pitched the policy as a deliberate change of direction from recent tax relief aimed at households. “This is about moving away from policies that give short-term sugar hits to consumers and move toward proper long-term investment in businesses that will grow our economy and increase productivity, increase labour demand, employment, and wages,” the statement said.
The party leaned on OECD research, saying the organisation ranks corporate income taxes among the taxes most harmful to growth because they affect decisions about investment and capital. It also pointed across the Tasman. “A similar move has been made by Australia in recent years and provides a credible international model,” the party said.
The Australian model is real but more modest than the New Zealand First version. From the 2021-22 income year, Australian companies with aggregated turnover under A$50 million have paid a 25 percent rate, against 30 percent for larger companies, according to the Australian Taxation Office. That is a five-point gap. New Zealand First is proposing an eight-point gap, with a lower threshold of $30 million.
New Zealand has had a single company tax rate of 28 percent since the 2011-12 income year, when it came down from 30 percent. A two-tier system would be new here, and it would bring the questions Australia has had to manage, such as how to treat groups of related companies that could split a business to stay under the turnover line. Australia deals with this by counting the turnover of connected and affiliated entities together. New Zealand First’s statement does not say how it would set the rules.
There is another quirk particular to New Zealand. Under the imputation system, company tax paid on profits is credited to New Zealand shareholders when dividends are paid out, and the shareholder then pays their own personal rate. For a small business owner who takes the profit home, the company rate largely washes out in the end. The gain from a 20 percent rate goes mainly to profits kept inside the company, which fits the party’s stated aim of reinvestment, but it would also widen the gap between the company rate and the 39 percent top personal rate, making it more attractive for high earners to leave income sitting in a company.
The promise lands in a campaign where tax is one of the main dividing lines. As the NZ Herald reported, Labour is campaigning on a capital gains tax, while National and ACT have both promised no new taxes if re-elected. Te Pāti Māori has proposed five new taxes, including a wealth tax, alongside changes to income tax rates, and the Greens have proposed their own form of wealth tax.
On company tax specifically, the parties are pulling in opposite directions. Interest.co.nz noted that the Greens want to raise the rate to 33 percent for large companies with turnover above $30 million, the same line New Zealand First has drawn but pointed the other way, while Te Pāti Māori wants to take the company rate back to 33 percent. Labour and National are sticking with 28 percent.
The policy also has to be read alongside the Government’s Investment Boost, introduced in Budget 2025, which lets businesses of any size deduct 20 percent of the cost of new assets in the year they buy them. BusinessNZ has argued strongly for keeping that scheme, and New Zealand First has not said whether its rate cut would sit on top of it or replace any part of it.
The $1 billion figure is the party’s own estimate and has not been independently costed. The party has not published the modelling behind its claim that the cut would pay for itself in the medium term through faster growth. Voters will get a clearer view if New Zealand First submits the policy for costing or includes it in a fiscal plan before polling day.
New Zealand First has used the campaign to court small business owners and regional voters. The party earlier set out a health policy built around prevention and nutrition,. A small business tax cut fits that pitch, and gives the party something distinct to bring to any coalition talks after 7 November.
For readers still working out where they sit on tax and the other big election issues, the NEWS WIRE voting tool matches your views against party policies.
Would a 20 percent company tax rate help your business, or is it $1 billion better spent elsewhere? Tell us what you think in the comments below.
This article was written by AI, briefed to report the facts, hopefully without some of the bias people bring to the job 🙂
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