Labour launched Andrew Little’s first policy yesterday to try to help businesses pay tax – but it’s a policy that other parties (National, Greens, ACT) have already promoted.
Was Labour that the Government had announced implemetation of an almost identical policy earlier this year and had already had public consultation on it?
Finance spokesperson Grant Robertson announced Labour’s first policy since Little became leader on Twitter at the same time as Little was announcing it in a speech.
Andrew Little addressing the Hutt Chamber of Commerce. Announcing new proposal to make life easier for small business
Labour proposing Flexible Tax for Business. Optional system to manage provisional tax when it works for them.
Planned change to business tax is Little’s first policy as Labour leader
Little has been leader since November 2014, eight months ago.
Under Labour’s proposal business will have option to pay tax through regular instalments at a rate they can adjust.
Discussion document on Labour’s flexible tax for business available
Email your feedback to email@example.com
Little’s media release on it:
Labour is launching a new proposal to give businesses more flexibility and control over when they pay their tax, Opposition Leader Andrew Little announced today.
“Today I am launching a discussion document to give businesses the option of paying their income tax through a system similar to PAYE called Flexible Tax for Business.
“Business people know their business better than the IRD so Labour wants to let business owners tailor their tax payments to fit their cash flows.
“Small businesses frequently tell me one of their biggest bugbears is how difficult it is to pay provisional tax.
“Under the current system they are forced to guess their annual income and pay tax in three large instalments throughout the year. If they guess wrong, they can be faced with a big bill at the end of the year which can push a small business to the wall.
“Under Labour’s proposal, businesses will have the option of choosing to pay their tax through regular instalments at a rate they can adjust. This means businesses can align their payments to suit their circumstances.
“To further help our businesses get ahead, our proposal scraps harsh late penalties for provisional tax, and raises the level at which provisional tax kicks in from $2500 to $5000.
“Flexible Tax for Business is about giving our businesses more control over how they pay tax. That’s how we will help them do well, grow and create jobs.
“From here, we will be sending out the discussion document for feedback from business owners around the country on how we can improve the proposal before we take it into the 2017 election,” says Andrew Little.
To read Andrew’s speech click here.
To view Labour’s discussion document click here.
This all sounds quite good. It also sounds quite familiar.
As Steven Joyce quickly pointed out:
Acting Minister of Finance Steven Joyce has congratulated Labour Party Leader Andrew Little on finally announcing his first “new” policy after eight months in the job, although unfortunately for Labour it’s a cut and paste of a previous Government announcement.
“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,” says Mr Joyce. “These in turn were based on National Party policy at the last election.”
The Government has already consulted on proposed changes to provisional tax including a business PAYE, changes to use-of-money interest and penalties, increased use of tax pooling and the use of tax accounts. A Green Paper was launched on 31 March this year and submissions closed on 29 May.
“Feedback on the Green Paper’s suggestions has generally been supportive, and provisional tax was the part most commented on. As we’ve said previously, the changes will require new technology to be implemented, which will be developed as part of the IRD’s Business Transformation project,” says Mr Joyce.
“Quite why Labour has started its own consultation is beyond me.
“Submissions are now closed but the Government would be happy to accept a late submission from the Labour Party in support of the proposal,” Mr Joyce says. “We also appreciate its implied endorsement of the Business Transformation process that will make these policy changes possible.”
A link to the March announcement can be found HERE.
A link to the Government’s Green Paper, Making Tax Simpler, can be found HERE.
A link to the National Party’s 2014 election policy on this issue can be found HERE.
Same for ACT Party
@actparty Here’s our statement, from May, on scrapping provisional tax:
The provisional tax system should be scrapped, says ACT Leader David Seymour.
“Having to estimate volatile incomes is unfair on taxpayers, especially given the penalties that occur if you get it wrong.
“I am pleased to see the government recognise that the use of technology allows provisional tax to be managed much more like PAYE – calculated as you earn income.
“The Government is seeking views on whether provisional tax estimations should be scrapped in favour of simply paying tax as you actually earn it.
“I urge businesses and individuals to take up the invitation by the Government to submit on this issue.”
Go to makingtaxsimpler.ird.govt.nz to have your say.
- Discussion on Better Digital Services – closes 15 May
- Discussion on the plan for the Tax Administration – closes 29 May
IRD already working through changes to Provisional Tax for small biz. Cloud Accounting software can bring this to life quickly
Same for NZGreenParty
@NZGreenParty Greens support simplifying tax for small business: Now that the four biggest parties in Parliament agree on:
Friday, 17 July, 2015 – 11:16
Now that the four biggest parties in Parliament agree on the way forward, it’s time for the Government to get on with simplifying provisional tax for small businesses, the Green Party said today.
“The Green Party has been talking about simplifying provisional tax for small businesses, like Labour suggested today, since before the 2011 election,” Green Party Co-leader James Shaw said.
“Anyone who talks to small business operators knows how annoying and difficult the current guesswork-based provisional tax system can be. Moving to a simpler, pay-as-you-go model would make life so much easier for small businesses and free up their time to focus on growing jobs and revenue.
“Labour’s announcement follows similar recent comments by NZ First, and Steven Joyce says the Government and IRD are open to ideas around simplifying provisional tax for small businesses. Even Act seems to agree with what is clearly now the mainstream consensus.
“Now that there’s political consensus about helping small businesses by simplifying the provisional tax system, the Government needs to get on with making the change,” said Mr Shaw.
It doesn’t sound like Labour are at the consensus stage yet, they have launched ‘a proposal’ and ‘a discussion document’ for consultation.
Was Labour unaware this was already policy shared by most other parties? Were they unaware the Government had already announced it and have already had a consultation process on it?
Was this thought through by Labour or was it thrown together to try and take the spotlight off their ham fisted approach to data analysis and targeting of Chines property buyers?