National propose $100k cash refund for businesses hurting due to Covid-19 disruption

National are proposing a GST cash refund of up to $100,000 for businesses that have lost over half of their revenue across two months due to the lockdown rules. 

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Opposition leader Simon Bridges said the Government had an “excellent health response” but were stalling on the economic side. Source: 1 NEWS

It would cost about $8 billion - three per cent of GDP. 

"We estimate this could benefit up to 160,000 businesses and save countless jobs," leader Simon Bridges said today. 

Simon Bridges. Source: 1 NEWS

"If the business paid more than $100,000 in GST over that period, then they would be able to claim up to an additional $250,000 as a repayable loan over five years," Mr Bridges said. 

Interest would be charged at a 10-year Treasury bond rate, which Mr Bridges said was about 0.7 per cent. 

For a business to be able to receive the full $100,000, it would need to have made more than $667,000 in the six months to January 1, 2020. 

On Friday, Mr Robertson announced the Small Business Cashflow Loan Scheme, saying that it had "become clear that the support that is available to our small and medium businesses from banks is not meeting their needs nor our expectations as a Government". 

The loans are interest free if paid back within a year and will provide $10,000 to every firm and in addition $1800 per equivalent full time employee. The passing of the law was the result of an administration error, Interest reported. 

Today, Mr Bridges said if National were in Government, it would also temporarily lift the threshold to expense new capital investment for firms investing in plant and machinery. 

"The Government lifted the threshold from $500 to $5000 as part of its Covid response. We’d go much further and lift it to $150,000 for two years.

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"For example, if a company spends $145,000 on a new machine to improve its productivity, rather than depreciating that asset over many years, it will be able to expense the full $145,000 in this tax year."

Mr Bridges told Business NZ today that "New Zealand is headed for, by the reckoning of every major economist, the sharpest and deepest recession we have ever seen". 

"The choices the Government makes now, in this Budget, and in the weeks ahead, will have a direct impact on how deep, how sharp, and how brutal it will be."

The Government is currently making changes to the law so businesses facing insolvency can place existing debt into hibernation and to provide temporary relief for some companies and other entities.