Business tax deferrals would help economy
Business tax deferrals would help economic recovery
7th November 2008
Kiwi Party Candidate, Gordon Copeland MP, today called for a suspension of provisional tax payments by businesses to aid the economy.
“As the full effects of the global credit crisis impact New Zealand business, cash is king,” said Mr Copeland. “Small employers in particular will struggle to pay staff wages and other outgoings, whilst at the same time paying provisional tax.
“That situation would be helped considerably if provisional tax was suspended immediately for at least 12 months and possibly longer, as circumstances dictate.
“Provisional tax payments will, in any event be difficult for businesses since, they must either be based on last year’s income, or forecast. However, if businesses get their forecast wrong, they face tax penalties which would be unacceptable given the current uncertainties and the likelihood that income will be trending downward for many businesses in the short term.
“I think that all of this adds up to a strong argument in favour of the immediate suspension of provisional tax, until New Zealand gets through this crisis. I appreciate of course that this will leave the Government short of revenue, but they are far better placed to borrow, to cover the cash flow deficit, than small businesses.
“In many ways this is an extension of the Kiwi Party’s already announced tax deferral policy for new business start ups. That policy is designed to encourage Kiwi entrepreneurs. Many new businesses fail in the first two years due to the tax payment burden.
“The Kiwi Party would allow a four year tax deferral to new business owners, so that tax payable in the first and second year of a businesses life would be postponed and made payable only in the fifth and sixth years.
“Again, this policy recognises the reality that ‘cash is king’ if new businesses are to survive, grow and succeed.”