Labour leader Chris Hipkins has announced a plan to help small businesses with less paperwork and faster payments. The package would cost an estimated $15.6 billion across tax and GST relief measures (Stuff).

Right now, businesses that earn $60,000 or more a year have to register for GST. That means they add 15% GST to their prices, collect it from customers, and hand it to Inland Revenue. In return, they can claim back the GST they pay on things they buy for the business. Labour wants to raise that $60,000 line to $80,000 from 1 July 2028. The party says about 35,000 small operators would no longer need to register. The threshold has not changed since 2009 (Labour Party) (RNZ).

Labour also wants to raise the instant asset write-off from $1,000 to $10,000 for businesses with turnover under $10 million. An asset write-off means a business can deduct the full cost of something like a computer or a ute in the year it buys it, rather than spreading the cost over several years for tax purposes. The package would also require big businesses to pay small suppliers within 15 days on invoices of $25,000 or less, and to publish data showing how fast they pay (RNZ). Labour's policy pages also mention a simple targeted capital gains tax on investment as part of the wider election platform (Labour Party).

Deloitte GST expert Alan Bullot says raising the threshold would not fix the problem, just move it. Businesses earning just above the new $80,000 line would still face a sudden jump in costs. Think of it like a toll road: moving the toll gate further down the road does not remove the toll, it just changes where the queue builds up. Bullot also says the change would help businesses that earn money from their own work, like tradespeople, more than businesses that buy and sell goods, because they have fewer costs to claim GST back on (RNZ).

According to Bullot, Inland Revenue's internal view is that the threshold exists only because of the cost of paperwork, and some in the department think it should be lower, not higher. Bullot also pointed out that many people earning under $60,000 are already caught up in GST through rules covering ride-sharing and food-delivery platforms, even if they earn as little as $10,000 a year (RNZ).

New Zealand's $60,000 threshold is mid-range compared with other countries. Bullot said that if it had kept up with wage rises since 2009, it would be about $130,000. Labour says it would make up for the lost GST revenue by cutting funding from its Investment Boost policy (RNZ).

Survey data suggests the threshold affects how people behave. In 2024, accounting platform Hnry reported that 36 percent of people it surveyed deliberately limited their earnings to stay below the GST line. Wellington personal trainer Carl Rein told Hnry he could not absorb GST or pass it on to clients, so he manages his workload to stay under $60,000 (RNZ).

If Labour wins the election, the GST threshold proposal will face some tough questions. Raising the threshold means collecting less GST, and Labour's plan to offset that by trimming Investment Boost funding will need to be checked against the party's wider budget. Labour's policy slate also includes a targeted capital gains tax, which is likely to draw scrutiny during the campaign (Labour Party).

The broader context here is that Labour has a history of GST policy controversy. In August 2023, Hipkins announced a plan to remove GST from unprocessed fruit and vegetables as a cost-of-living measure, estimated to save households about $4.25 a week (RNZ). Tax experts criticised it sharply, calling it a bet on voters not understanding the detail (RNZ). Inland Revenue has also recently called out horticultural tax dodgers in a separate report (RNZ).

Unlike the fruit-and-vegetables policy, this package targets the costs of running a business rather than the prices consumers pay. Whether experts receive it more warmly than the 2023 plan is an open question, but the early signal from Bullot is that the threshold shift creates as many boundary problems as it solves. Election material on Labour's website is authorised by Rob Salmond at 2 Gilmer Terrace, Wellington, while Hipkins' material is authorised by Chris Hipkins MP at Parliament Buildings, Wellington (Labour Party).