“Woeful, Inept And Out-of-touch”- NZ Politicians Revealed As Widely Ignorant Of Sole Trader Sector

Wellington, 12th September 2023 - With just a month until the election, political parties across the spectrum have ‘failed the assignment’ when it comes to understanding New Zealand’s sole trader sector, despite it making up nearly 20 per cent of the workforce, or around 400,000 potential voters.

In a first for New Zealand, Hnry - the country’s largest accountancy designed specifically for sole traders - canvassed political parties about what they would do to support sole traders if elected. This sector includes contractors, freelancers and the self-employed working across a wide range of industries, from trades, creative and professional services, to transport and the medical sector.

Hnry CEO James Fuller describes all responses from the political parties who replied as “a level playing field of mediocrity that is woeful, inept and out-of-touch”. He says there is a widespread lack of understanding or ideas, which will see NZ lag even further behind international peers.

“No one understood who sole traders are and what they do; they either lumped sole traders in with small businesses (despite them belonging to different groups), or shoehorned their policies to answer our questions, but completely missed the mark,” he says.

All the parties polled responded to Hnry’s approach except New Zealand First and Te Pāti Māori. Neither National nor Labour committed to differentiating sole traders in the Census (who are not currently separately defined) or were able to provide directly targeted tax or financial policies.

The Greens committed to free mental health services, and while both ACT and TOP agreed to include sole traders in the next Census, their other promises - including a simplified tax structure and streamlined ‘systems’ - are misguided, misinformed and often irrelevant to sole traders, Fuller says.

“ACT bizarrely raised ram raids as a concern for sole traders, yet by their very nature, they are unlikely to own or operate a brick-and-mortar business, revealing a deep misunderstanding of the sector. The recent IMF report on our economy predicts tougher times ahead, so we need an incoming government with clarity about the vital role sole traders play, who will implement measures directly benefiting those at the coalface of the economy,”

Fuller says a number of OECD countries already recognise the value sole traders bring to economic growth and is worried that New Zealand is falling further behind.

“Australia has grants specifically for sole traders, while in Canada, you can claim special benefits when taking maternity leave from self-employment totalling 55 per cent of your regular income. France runs an effective micro-enterprise tax scheme with differing effective tax rates for sole traders to encourage people into certain professions where there may be need.

“In Luxemburg sole traders and freelancers are entitled to credits on their income tax. Self-employed traders in Ireland can claim an earned income tax credit of €1,775 or a tax credit worth 20 per cent of qualifying earned income - whichever is lower. This is the equivalent of around $3000 New Zealand dollars - substantially higher than what sole traders can currently claim here, which is as little as $10 a week,” he says.

Fuller says Labour and National’s pledges to cut back on public sector ‘contractors and consultants’ also carry a real human cost for sole traders, with both major parties failing to differentiate between regular sole trader contractors, and expensive consultants brought in from high-charging global consulting firms.

“A sole trading business analyst working for a government organisation is very different to teams of people deployed from the big four global consulting firms. People working in hands-on roles, from finance, to HR, public-facing and policy roles will be casualties of what is essentially a dog whistle policy,” Fuller says.

Hnry processes nearly one per cent of the entirety of New Zealand’s tax revenue on behalf of tens of thousands of sole traders. Fuller says despite their significant economic contribution, the sole trader sector’s needs are being ignored.

“This was the opportunity for all parties to put their best foot forward and tell sole traders how they will specifically support them. No one met the brief. Where are sole traders in economic policy? They’re a ghost sector that is again slipping between the cracks.

“If the people vying for votes want some suggestions, there are three things they can immediately do:

• Introduce an appropriately geared minimum living wage for sole traders.
• Facilitate an increase in the Independent Earner Tax Credit, and
• Provide targeted tax relief for sole traders.

“We regularly take the pulse of the sole trader sector, and understand what they need to succeed and grow in the current economic climate. Our door is open, and we’re always prepared to meet with ministers or MPs who are ready to step up and help the sole trader sector,” Fuller says.

Hnry’s latest Sole Trader Pulse Survey found that 30 per cent of sole traders reported mortgage stress, 77 per cent are cutting costs to deal with inflation, and 92 per cent are avoiding taking on additional debt.

To find out more about Hnry visit the website.

© Scoop Media