Report from BusinessDesk by Kristen Paterson
The Government has abandoned controversial plans to impose a tax on employee- paid carparks in Wellington and Auckland after a backlash that rallied opponents ranging from unions to business lobbies.
Finance Minister Bill English said today that while the proposed tax was made as a matter of fairness, the government needed to be pragmatic in a situation where compliance costs may outweigh likely returns.
“Common sense has broken out everywhere,” said Kim Campbell, a senior manager at the Employers and Manufacturers Association (Northern) and a member of the FBT Action Group formed to oppose the inclusion of a carpark tax under the Fringe Benefit Tax bracket.
The tax would have affected everyone from cleaners and hotel workers, to businesses, universities, schools, government departments, councils and hospitals.
“We set out to get rid of what is clearly a stupid tax. We came out really strong at the beginning because it is very difficult to get rid of a tax once it’s been put in,” Campbell said.
The FBT Action group raised concerns that the tax would be passed on to low paid workers, as well as decreasing safety if employees had to park off sight.
Revenue Minister Peter Dunne said today that for expected revenue of about $17 million, the difficulties around ensuring the policy would not have adversely impacted workers made it seem sensible not to proceed.
“We will continue to focus on fairness in the tax system but we also think that there are bigger and more important tax matters for officials to focus on,’ says Dunne.
But Campbell says the FBT Action group has its eye on other potential tax changes, including one that could affect cellphones and laptops.
“This is only the beginning,” he said.
The FBT Action Group are a mix of business and union representatives including the Council of Trade Unions, the Unite Union, the Employers and Manufacturers, Creative Agencies Association of New Zealand, car parking company Tournament and the Property Council New Zealand.
News from NZ Government
The Government will not continue with a proposal which would have changed the way some employer-paid carparks in central Wellington and Auckland are treated for tax purposes, Finance Minister Bill English and Revenue Minister Peter Dunne say.
“The proposal was made as a matter of fairness, because in general we consider that cash and non-cash benefits should be taxed the same way,” Mr English says.
“While we do not resile from that general principle of fairness, we do need to be pragmatic. This was considered likely to be one of those proposals from IRD where the cost of compliance, compared with the likely return, made it not worth pursuing.”
Mr Dunne says officials’ estimates of the number of carparks which would have been affected were far fewer than the 180,000 that was being talked about publicly.
“Even so, for expected revenue of about $17 million, and the difficulties around ensuring the policy would not have adversely impacted other workers, it seems sensible not to proceed,” Mr Dunne says.
“We will continue to focus on fairness in the tax system but we also think that there are bigger and more important tax matters for officials to focus on.”
Ministers said that the issue was under consideration at select committee and had attracted considerable comment.
On balance, Cabinet has decided not to continue with it.