Carpark tax might go if cost too high

Bill English. Photo / David White

The Government might reconsider plans to tax employers on inner-city carparks they provide to employees if it finds the additional costs on businesses would outweigh the revenue raised, Finance Minister Bill English said yesterday.

However, Mr English said he didn't believe the tax would lumber businesses with $30 million in additional compliance costs as suggested by a lobby group.

The FBT [Fringe Benefit Tax] Action Group, made up of industry and business groups, has now enlisted the country's top advertising agencies and plans a publicity blitz to oppose the tax.

The group yesterday gave its submission against the proposal to extend fringe benefit tax to all employer-provided carparks in Auckland and Wellington CBDs.

It says the new tax would mean businesses paying close to $1500 a year for each on-site parking space and over $2350 for each commercial parking space they paid for employees to use. That would discourage employers from providing workers with parks.

Unlikely ally Matt McCarten of the Unite Union has warned the move would cause safety problems for nightshift workers. Many would be forced to walk to cars parked away from their workplaces "at unsafe hours in some of the most unsafe parts of the city, risking assault and rape".

While it is estimated the tax would raise $17 million in revenue, the FBT Action Group yesterday said it would add $30 million to business compliance costs.

Mr English said he didn't believe the $30 million estimate was accurate. However, he said officials would look at what those costs would be, "because it would be unreasonable to have a tax if the compliance costs were really big".

Asked if that meant the Government might reconsider the tax, Mr English said if compliance costs were "way out of proportion, yes we would".

Ben Fields of accounting firm Lock & Partners, which prepared the estimate, stood by his numbers and welcomed Mr English's willingness to reconsider the tax if those numbers were proved accurate.

Mr Fields noted the proposal's unintended consequences included the likelihood that CBD schools and healthcare facilities would end up paying tax on carparks provided to teachers, nurses and other healthcare workers and carparks provided to public servants, including Inland Revenue Department officials who were also likely to be subject to the tax.

Act leader John Banks has indicated he's unlikely to vote for the tax and Labour's revenue spokesman, David Cunliffe, said his party would not support the legislation in its present form.