Business backs stability over reform

Deloitte's perspective

By Robyn Walker, Partner, Deloitte

In a world where “bad news sells”, it’s easy to get bogged down in the illusion that the tax system isn’t fit for purpose, on the basis that Inland Revenue and Treasury have predicted that we won’t have enough tax revenue… in 2065. These forecasts are based on predicted demographics and ceteris paribus (an assumption that nothing else will change). Given tax laws are constantly being assessed and tweaked, that assumption is unrealistic, but the dire future predictions are likely influencing the proliferation of new taxes being proposed in Election 2026 and an increasing number of people expressing a view that more tax is necessary, not just in 2065, but now.

How does this compare with business sentiment? Compared with the results of the Election Survey in 2023, most respondents still favour maintaining taxes at current levels, although there is an increasing minority favouring higher personal taxes and GST.

The high numbers preferring the status quo on existing taxes flow through to thoughts on new taxes, with the majority opposed to wealth taxes, windfall taxes, and land taxes. The popularity of Capital Gains Tax is on the rise, with marginally more now in favour than against, which is a change from 2023.

Putting aside tax types, a new question asked in this survey was whether it was important to have an internationally competitive tax system. Over 93% of respondents viewed a competitive tax system as being either important (37.7%) or very important (55.8%).

While New Zealand struggles to compete on rates (our corporate tax rate is much higher than the OECD average), our comparatively simple tax system (including lack of a comprehensive capital gains tax) can count in our favour.

The past three years

In the 2023 Election Survey, a staggering 92.7% of respondents felt that the then-Government had increased the cost of doing business. In 2026, things are more positive, with only 47.1% considering that costs have increased and 41.7% indicating that the Government had not contributed to cost increases.

When it comes to taxes, the majority of respondents felt compliance costs had stayed the same, which is a flip of the position in 2023, when over 63% of respondents felt tax compliance costs had increased over the previous three years.

From a tax perspective, the last three years have been focused on incremental improvements, virtually all of which have been taxpayer favourable. This term, the Government has placed a lot of emphasis on trying to simplify the tax system and take out compliance costs. While only a small number (1.8%) thought that compliance costs had decreased, that’s likely due to the lead time it takes for a tax change to flow through the legislative process and into filed tax returns.

Many businesses are anticipating a significant reduction in compliance costs once the Fringe Benefit Tax changes to motor vehicles announced in Budget 2026 are put in place. Other notable compliance cost measures which have already taken effect include providing exemptions for residential solar, simplifying GST record-keeping rules, allowing flexibility in how employee benefits are taxed, increasing employee share scheme thresholds, and ensuring donated trading stock is not taxed.

On top of the compliance cost changes, there were a number of initiatives aimed at boosting productivity, including the big-ticket items of personal tax cuts (Budget 2024) and Investment Boost (Budget 2025).

The choice

When it comes to taxes, Election 2026 provides two very stark choices, parties proposing significant tax reforms and parties largely comfortable with the status quo.

Ultimately, this survey suggests that business sentiment is not calling for wholesale tax reform. Respondents see value in stability, simplicity and international competitiveness, even while debate about new taxes is gaining volume.

Chapman Tripp's perspective

Investment Boost lacking a bit of lift?

By Bevan Miles, Partner, Chapman Tripp

Almost half (45.8%) of 2023 survey respondents thought accelerated depreciation deductions would positively influence decision making around investing in new, productivity-enhancing assets, against only 27.3% who thought there would be no impact.

The Government responded with Investment Boost in 2025. But the take-up of the incentive has been lower than expected with the result that the numbers have flipped. In 2026, only 25.5% were in the positive influence camp, while 47.1% were reporting no effect.

Why? The economy will be a factor, but there are others specific to Investment Boost. A: it is still relatively early days, and amendments were needed earlier this year to ensure the intended application. B: research for Inland Revenue found only 29% of businesses felt they had a good understanding of Investment Boost.

But as we move into the election campaign with Labour proposing to repeal Investment Boost, there is an important point to be made. Businesses value stability. Doubt over continued availability raises uncertainty and influences decision making. If Investment Boost is to be discontinued, transitional provisions should be put in place to maintain accelerated deductions where investment decisions have already been taken.