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National proposes GST cash refunds to help keep businesses afloat

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National proposes GST cash refunds to help keep businesses afloat.

RNZ Reports:

National is pushing for struggling businesses to be offered GST cash refunds of up to $100,000 as part of its alternative plan to salve the economic damage caused by Covid-19.

The proposal stands in contrast to the government’s scheme for small businesses unveiled last week which offers 12-month interest-free loans.

Speaking to business leaders over a video call this afternoon, National leader Simon Bridges said the government’s approach was a “a recipe for more debt, more misery and more pain”.

“If you’re a business already struggling with cash flow and turnover, getting another loan is probably the last thing you need,” Bridges said.

Instead, the opposition would implement a GST cash-back scheme.

If a company could show that its revenue had dropped by more than 50 percent across two successive months, it would be able to claim back the GST paid over the second half of 2019, up to a maximum of $100,000, he said.

Bridges said National’s proposal was more targeted than the government’s, but also more generous as the eligible businesses would not have to pay the money back.

“These businesses have been forced to shut down in the national interest. It is in the national interest to keep them afloat.”

Firms which had paid more than $100,000 in GST over the six-months could also apply for an additional low-interest loan of up to $250,000.

“We estimate this could benefit up to 160,000 businesses and save countless jobs.”

On that basis, National estimated the scheme would cost approximately $8 billion.

National would also go further than the government in allowing firms to deduct capital investment from tax, Bridges said.

As part of its initial rescue package, the government allowed companies to immediately expense any assets up to $5000, up from $500.

“We’d go much further and lift it to $150,000 for two years,” Bridges said.

“If you have a company and spend $145,000 on new machinery, rather than depreciating that asset over many years, you’ll be able to expense the full $145,000 in this tax year.”

Concluding his speech, Bridges acknowledged the government had taken “the right steps to contain the virus”, but was now stalling.

“National has a plan to rebuild our economy,” he said.

“We will get New Zealand working again, and it is our New Zealand heroes, all five million of them, that depend on us doing so.”

 

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4 COMMENTS

  1. Meanwhile Robbo has suggested helicopter payments to scatter cash hither and yon. Robbo says it saves the cost of administration when the COL don’t bother checking whether everyone is in NEED of taxpayers money.

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  2. Like the plan around the expensing of plant. For years have thought that we should be like Singapore and be able to depreciate fixed plant over 5 years. By then it needs replacing or upgrading in the world. That’s what makes the Chinese so good. Top of the line equipment and not all made in China. Italian plant can be among the best in some industries.
    See no reason to include vehicles in that. That would be a rort.

    Businesses need to keep cash to grow. and invest that cash in good equipment rather than the batch and the BMW.

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    • So our business has a normal turnover of $100,000 half yearly with purchases of $75,000 to give a Gross profit margin of 25% and Gst payment of $3260. In the half year per Bridges scheme we purchased a new machine for $50,000 so recieved a Gst refund of $3260 so no rebate. Even in a normal period $3260 of refund will not go far so failure possible/likely, sorry Simon if this is your best you have little understanding of business so go back to Lawyering were you still get paid for losing.

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