No time to renegotiate contracts

National’s Revenue Spokesman, Annabel Young MP says that ordinary businesses will be wiped out by the dramatic increase in costs caused by the predicted Labour/Alliance changes to FBT.

“If Labour raises the rate of FBT to 64% (to keep up with an income tax rate of 39%), many employers will be trapped by the rising tide of tax costs and will be unable to switch to cash based-contracts.
Employers that provide cars will be especially hard hit even where the car is a necessary tool of trade.”

“Employees will be hit directly if their contracts provide for a bulk fund out of which benefits and FBT are deducted. Their net package will go down.”

Miss Young said that the cost to employers to change their benefit packages would be huge. “It’s another windfall for lawyers and accountants but it eats into the heart of the ordinary business-operator.”

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