Labour says that if it wins the next election, it would scrap the government's current business tax break — called Investment Boost — and replace it with a package aimed at small businesses.

The party's small business spokesperson, Dan Rosewarne, said the goal is to cut paperwork. "Running a small business should mean building something of your own, not spending evenings chasing overdue invoices and filling in forms," he said. Labour leader Chris Hipkins said small business owners would "get paid sooner, get more support to invest in the equipment they need, and keep more of what they earn."

Here is what the package would do.

Bigger tax deduction for buying equipment

Right now, small businesses can immediately deduct up to $1,000 from their taxable income when they buy equipment or tools. Labour would raise that to $10,000. That means a small business — say, a plumber buying a new van, or a café buying a coffee machine — could knock the full cost off its tax bill in the year it buys the item, instead of spreading the deduction over several years.

The current Investment Boost policy, introduced by the coalition government, lets businesses of any size claim a 20 percent up-front deduction on new assets. Labour would scrap that entirely and replace it with this smaller, targeted version (RNZ).

Fewer businesses would need to deal with GST

Businesses in New Zealand have to register for GST if they earn more than $60,000 a year. Once registered, they add 15 percent GST to what they sell and can claim back the GST they pay on what they buy — but they also have to file regular GST returns with Inland Revenue.

Labour would raise that threshold to $80,000. The party says about 35,000 businesses would no longer need to register, which means less paperwork. The catch: those businesses also would not be able to claim back GST on their own purchases.

Large firms would have to pay small suppliers faster

Late payments are a major complaint from small businesses that supply goods or services to big companies. Labour would require large businesses to pay small suppliers within 15 days for invoices up to $25,000. Big firms would also have to publish how quickly they pay their suppliers, so the public can see who is slow and who is not.

Where does the money come from?

Labour's broader spending plan relies on a capital gains tax it has proposed. That tax would apply a 28 percent rate on profit from selling commercial or residential investment property, but would not apply to the family home, farms, KiwiSaver, shares, businesses or inheritances (Labour Party policy page). The party says the money raised would go entirely to health, and that nine out of 10 New Zealanders would not pay it. That policy was already on Labour's website before this small business announcement.

The political calculation behind the small business package is fairly straightforward. Investment Boost currently helps businesses of all sizes. Labour's replacement narrows that to small businesses only, freeing up money to pay for the GST threshold change and the payment-time rules. It is a direct pitch to small business owners — a group Labour has traditionally struggled to win over — and a clear contrast with the coalition on who tax policy should help.

For anyone who follows Parliament, the shape of this is familiar. Labour is bundling together a tax cut (the bigger write-off), a tax exemption (the GST threshold) and a new rule (the 15-day payment requirement) into one small business story. The capital gains tax pays for health; the small business package is funded separately, or is offset by the money saved from scrapping Investment Boost.

The 15-day payment rule is the part most likely to face pushback. Large companies often take 30 to 60 days to pay their bills because that helps them manage cash flow. Being forced to pay in 15 days — and to publish their payment times — is something many would resist. Whether that could be legislated without causing problems for supply chains is a question MPs on a select committee would likely examine.

The GST threshold change has a downside too. Businesses that come out of the GST system save on paperwork, but they lose the ability to claim back GST on what they buy. For businesses that spend a lot on materials or equipment, that cost adds up.

Labour has not released the costings for the small business package on its own. The capital gains tax revenue is tagged for health, so the write-off lift, the GST threshold change and the payment mandate need to be paid for from elsewhere in Labour's budget — or offset against the money saved by dropping Investment Boost. How those numbers add up will be tested when Labour releases its full fiscal plan.