News hit yesterday of an unlikely alliance between a business association and one of the large unions. They were teaming up together to fight a proposal by the government make employer provided carparks subject to fringe benefit tax (FBT).
Unionists and business groups have joined forces in a rare alliance to lash out at a new tax on employees who receive free carparks as part of their remuneration packages.
The government is planning to extend a fringe benefit tax (FBT) of almost 50 per cent to employer-provided parking in the Auckland and Wellington CBDs.
The newly formed FBT Action Group is protesting that the legislation, now before a select committee, is discriminatory and pointless.
It says the new proposal means businesses would pay an extra $1,500 per year for every on-site car park, and almost $2,400 for commercially supplied parks.
The group’s founding members include the Employers and Manufacturers Association (EMA) Northern, the Property Council, and parking company Tournament.
The Unite Union, headed by Matt McCarten, is also ready to throw its weight behind the campaign.
McCarten said that while the tax appeared to target the untaxed benefits of well-paid workers, it would also capture the blue-collar workers who could least afford it.
I suspect that one of the key reasons that both employers and unions are so keen to fight the proposal is that they both know just how useful carparks are when it comes time for salary/ wage negotiations. It allows businesses to provide a benefit to workers without it directly impacting their salary budgets. But by its very definition that is a benefit that an employee is receiving outside of their salary and the exact reason that we have FBT for in the first place. This group, along with Labour have also attacked the idea due to the fact it is only expected to bring in around $17m of extra tax but that ignores an important point. We currently have a loophole in our tax system that helps to create distortions in our transport policy.
The distortion comes about because an employer providing a free car park can do so without paying FBT yet if they were to pay for an PT fares of an employee, they would have to pay FBT on them. I can understand why business groups and unions object but opposing proposals like this is one of he things that should make people question Labours commitment to improving transport, particularly public transport.
If it turns out that this is just too hard politically hard to get though, perhaps an alternate idea could be proposed that removes FBT from employer provided PT passes. Along with that we should also consider similar rules as to what exists in California where employees that are provided with a free carpark are allowed to swap it for an equivalent increase in their salary/wages.