Employers trapped by rising tide of FBT
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.”