The Taxpayers’ Union is welcoming proposed changes to company tax in the National Party’s new small business policy. In particular, changes to capital expensing and loss continuity are moves the Union has advocated for some time.

National say they will “Lift the threshold to expense new capital investment from $5000 to $150,000 per asset."

Union spokesman Louis Houlbrooke says, “Allowing businesses to claim more of their capital expenses up front will encourage investment in equipment and systems that will drive up productivity and wages. In fact, in our submission to the Tax Working Group we suggested abolishing the threshold entirely, like the United States recently did for some expenses.

”National also say they will “Implement a business continuity test (rather than ownership test) to allow the carry forward of tax losses."

Mr Houlbrooke says, “It’s normal and healthy for businesses in their start-up phase to have changes in ownership structure as they attract investors. But right now, these ownership changes can be punished by the tax system. As we’ve argued in the past, allowing new businesses to carry forward losses while attracting investment would make the process of seeking capital considerably easier.”

“Not all tax changes have the same bang for buck in terms of making the boat go faster. But these two policies from National are good examples of ways the government can sacrifice a tiny amount of revenue to achieve big gains in economic productivity.”

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