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Car park tax could be doomed

Friday 15 Mar 2013 3:33 p.m.

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By Peter Wilson, Political Writer

When big business and trade unions get together to fight the Government, you know it has a problem.

That's what is happening right now over the proposal to put a fringe benefit tax on employer-provided car parks.

In terms of revenue, this is no big deal.

It would bring in an estimated $17 million a year and ministers must be wondering whether it's worth the trouble.

The feeling around parliament is they're close to deciding it isn't worth the trouble - they just need a way out that doesn't make them look stupid for putting it up in the first place.

It's amazing that they did. It cuts across National Party policy on so many fronts and is a gift for the opposition.

National sells itself as the business-friendly party. It cuts compliance costs and it slashes red tape. It makes commercial life easier, it eases the tax burden and it repeals petty rules and regulations imposed by the previous Labour government.

And, worst of all, Prime Minister John Key said in 2005 when National was in opposition and he was its finance spokesman: "We won't entertain suggestions of applying FBT (fringe benefit tax) to on-premises car parks."

Key prides himself on keeping his pledges. The only way he can keep that one is to scrap the proposal.

It seems to have slipped past the alarm systems that ring bells when anything potentially troublesome is flagged.

It should have been quietly put down before anyone outside the Beehive noticed, but it wasn't.

Now the finance and expenditure select committee is hearing public submissions on it in front of TV cameras.

MPs have been listening to the FBT Action Group, a coalition of employer groups, unions and parking companies.

Employers and Manufacturers Association chief executive Kim Campbell delivered the warning: The "big end of town" doesn't like what it sees.

The coalition has figured out it would cost more than $30m to collect $17m, and ministers haven't made much of an effort to dispute that.

Economic Development Minister Steven Joyce says the estimate is "a bit of a stretch".

Finance Minister Bill English says he doubts its accuracy but officials will be looking at it and if compliance costs are "too onerous" then the government might reconsider the proposal.

If compliance cost are half of what the coalition has estimated, that would mean the tax would bring in just $2m a year.

So don't be surprised if the officials decide compliance costs are too onerous and the Government reconsiders the proposal, bites the bullet and scraps it.

It isn't just compliance costs that would drive that decision.

The tax would be levied on employers and, presumably, passed on to employees who use the car parks unless companies pay it themselves.

It would be fiendishly complex to calculate who was using what and for how long.

The only thing the Government has going for it is that the proposal is under the name of Revenue Minister Peter Dunne, and he isn't a National Party MP.

Dunne is leader of United Future and is a minister outside cabinet under his party's support agreement.

Labour's revenue spokesman, David Cunliffe, says Dunne is going to be the scapegoat.

"National is setting him up to carry the can," says Cunliffe, who claims to know "very senior" National MPs are working on ways to shift the heat onto Dunne.

Cunliffe says National MPs on the finance and expenditure committee, of which he is a member, have been "scathing" about the tax proposal.

If he's right, National's caucus could ask ministers to dump the proposal and they might gratefully accept the request.


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