New Zealand First will campaign on slashing the tax rate for small businesses to 20%.

The party says the drop from 28%  is a "much-needed bold step" to encourage more investment, expansion, productivity and employment.

The rate would apply to businesses with turnover under $30 million and cost the government $1 billion.

The party said that would be "more than covered" in the medium term by more companies collectively paying a lower tax rate, higher employment, a growing economy and more spending.

"Corporate taxes can reduce productivity, particularly in entrepreneurial and innovative sectors,"  the party said in a statement.

"Lower company tax rates can improve long-run productivity growth, and stimulate the creation of new companies."

It said the policy was a move away from "short-term sugar hits to consumers" and towards long term investment in businesses.

Australia made a similar move in recent years which provided a credible international model, it said.

"New Zealand needs to catch up to key competitors to ensure that we are seen as a country of growth for our businesses that innovate and create productivity and employment.”