NZ First Pledges 20% Tax Rate for SMEs

New Zealand First is launching a campaign to lower the company tax rate for small and medium-sized enterprises (SMEs) to 20% from its current 28%. This move aims to encourage investment in SMEs, boost productivity, and create jobs. The party estimates that this reduction will have an initial annual fiscal cost of approximately $1 billion.

The OECD has consistently ranked corporate income taxes as one of the most harmful to economic growth due to their impact on investment decisions and capital formation. Lowering corporate tax rates can improve long-run productivity growth and stimulate the creation of new companies, according to New Zealand First.

Similar moves have been made by Australia in recent years, which provides a credible international model for New Zealand to follow. The party believes that this change will help turn the economy around and get it growing. Lower company tax rates can improve long-run productivity growth, reduce corporate taxes' negative effect on productivity, and stimulate the creation of new companies.