Andrew Little has launched his first policy since becoming leader, proposing changes to the way businesses pay tax.
Flexible tax for business would introduce a pay as you earn element to company tax. Labour also wanted to double the threshold at which businesses are required to pay provisional tax to $5000 and abolish late payment penalties.
The policy is the first the party has announced since the 2014 election. The scheme is voluntary, and Labour has presented the plan as one open for consultation.
Provisional tax is a plan and I welcome Labour looking at a PAYE scheme for businesses. My Xero accounting package gives me monthly accounts which are accurate. I could easily pay income tax on quarterly profits rather than pay based on my previous year’s profitability which can be very different.
However Labour’s idea is far from a new one. The Government announced a consultation on it four months ago!
In March, Revenue Minister Todd McClay revealed a consultation paper from Inland Revenue which raised the idea of a business PAYE.
And they’re not even 2nd with the idea!
Earlier this week, New Zealand First leader Winston Peters signalled a strikingly similar policy for business tax.
“In the interests of New Zealand we ask the Government to support a much needed change to an oppressive business tax that strangles small businesses especially,” Peters said on Wednesday.
But third is better than not supporting it at all.
Acting Finance Minister Steven Joyce said Labour had simply “cut and paste” the Government’s position.
“Labour announced today it was launching a discussion document on changes to provisional tax for businesses. However it seems to have overlooked that the Government launched its own discussion document containing almost identical proposals back in March,” Joyce said.
“These in turn were based on National Party policy at the last election.”
But again regardless of it not being a new idea, it is still good to see Labour hopefully embracing a policy which will make it easier for businesses.