Government Plans New Tax on Motorists

Car parks in Auckland and Wellington are set to cost 50% more as a result of John Key's new car park tax, business leaders and unionists say.

The indiscriminate 50% tax hike will be forced on everyone in the CBD from night-shift cleaners to merchant bankers, but is expected to pick up a comparatively paltry amount of additional revenue.

The new tax proposal, snuck into tax legislation in December, is currently before a Select Committee, and involves extending the 50% Fringe Benefit Tax (FBT) to all employer-provided car parks in the Auckland and Wellington CBDs.

This would mean businesses would pay an extra $1,500 a year for all on-premises car parks, and close to $2,400 a year for all commercially supplied car parks.

The FBT Action Group, a coalition of industry groups and businesses including Employers and Manufacturers Association (EMA) Northern, Property Council New Zealand and Tournament Group, says the tax goes against all the principles of good taxation policy.

“This is a discriminatory and inefficient piece of legislation,” said Property Council CEO Connal Townsend. “It will hurt businesses and workers and undermine the vitality of our city centres. It is grossly unfair that it only focuses on Auckland and Wellington, not every city in New Zealand.”

Mr Townsend says the new tax cannot be justified from a cost/benefit perspective.

“This new tax will no doubt entail major compliance costs and productivity losses for businesses, and for what benefit? The Government’s telling us this is only going to capture about $17 million a year in FBT,” said Mr Townsend. “It begs the question: what’s the point? Shouldn’t the Government be focusing on the big issues instead? The cost to implement this tax will exceed the revenue generated.”

Those comments were supported by an independent NZIER review, which found that the Government’s estimate of how much revenue the tax would generate failed to adequately consider the costs and benefits involved.

The review concludes that law-makers “cannot be confident that the proposals in the Bill are in the interests of New Zealand” and that “it is not clear at all from the RIS [Regulatory Impact Statement] that the proposed solutions are superior to the status quo.”

EMA Chief Executive Kim Campbell says that the new tax creates distortions and inequities, rather than removing them.

“The new tax will apply to all business in the CBD, but only some of those outside it, which is a big blow to CBD competitiveness,” said Mr Campbell. “Over time, this is going to push more and more businesses to the fringes, and undermine our most productive economic hubs. Limiting it to just Auckland and Wellington makes this a regional tax, something the Government has already ruled out as a revenue-gathering exercise to support public transport infrastructure spending in Auckland.”

Unite Union National Secretary Matt McCarten, whose organisation will join the FBT Action Group’s upcoming campaign against the new tax, says that the shift workers he represents will now be subject to FBT on work car parks if their shifts start or finish outside a 10pm-6am window.

“This is a daft idea drawn up by bureaucrats in Wellington who have no concept of reality,” said Mr McCarten. “The reality is that while the tax seems to target the benefits of highly paid white-collar workers, it also captures blue-collar night workers who can least afford to pay it. The reality is that thousands of night-shift workers in the city centre will lose their car parks, and will be forced to walk to and from cars parked in the streets at unsafe hours in some of the most unsafe parts of the city, risking assault and rape.”

Meanwhile, Tournament Group Managing Director James Brown says the new tax will be virtually impossible to administer.

“Trying to determine whether a car park is for staff or for customers, whether a car is for private or business use or even whether a worker is an employer or an employee is going to be a nightmare for the IRD,” said Mr Brown. “There a so many potential loopholes for tax-dodgers to exploit.”

The FBT Action Group is now preparing a public campaign to mobilise opposition to the proposal.

Mr Campbell said the Government had done a good job of sneaking the new tax in through the back door to avoid raising the ire of the public, and that the role of the FBT Action Group was to bring attention to the issue.

“This Group will use a range of media to let people know that the tax man is coming after their car parks, and next it will be their mobile phones and lap tops,” said Mr Campbell.

About the FBT Action Group

The FBT Action Group is a coalition of leading businesses and industry organisations that has been formed to articulate shared concerns about the proposed changes to the FBT, in particular the extension of the tax to include employer-provided car parking in the Auckland and Wellington CBDs.

The Group’s foundation members includes the following:

• Employers and Manufacturers Association (Northern) – 8,000 business members;

• Property Council New Zealand – more than 600 member companies; and

• Tournament Parking – leading provider of parking services nationwide
The Group’s role is to bring to the attention of policymakers, the public, and other stakeholders the harm that the new tax will bring to businesses and workers, and the costs that it will occur for a likely negative fiscal impact.

ENDS

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