Labour will simplify small business tax

A Labour government will substantially simplify tax for small businesses, Labour Leader David Cunliffe says.

David Cunliffe made this commitment to a business audience hosted by Ernst and Young in Auckland.

“Small businesses are spending far too much time and money complying with a tax system that wasn’t designed for them.

“According to the Institute of Chartered Accountants, businesses with a turnover of $59,000 a year or less are spending 10 to 13 per cent of their earnings on tax compliance. Yet a business with a turnover of more than $1 million spends less than 1 per cent.

“Tax compliance is an avoidable drag on the productivity of our small businesses which contribute about 40 per cent of tax revenue.

“New Zealand is lagging behind other countries when it comes to tax simplification.

“Labour’s approach will build on the Institute’s proposal of ‘no more than one hour, one return and one payment each month for income tax and GST compliance’.

“The Institute published its proposals four years ago. The only thing stopping this sensible overhaul of tax compliance is the Government dragging its feet.

“We will radically reduce the number and frequency of returns, especially for micro businesses. We will also consider alternatives to the provisional tax regime and explore options around the taxation of the smallest businesses, including the treatment of assets.

“Tax simplification can be done on a revenue-neutral basis. A Labour government will work carefully with officials to ensure the new system is straightforward and robust.

“The nature of small business is that owners risk the shirt off their backs every day. Labour recognises their struggle and will help make their businesses more successful,” David Cunliffe says.

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