In this recent post Matt L considered the Government’s proposal to extend fringe benefit tax (FBT) to employer-provided parking in Auckland and Wellington’s CBDs.

The Government is keen to extend FBT to employer-provided parking because the parking being provided has a fairly high (market) value. Hence, in these locations employer-provided parking constitutes a significant non-cash benefit, or a “perk” in common parlance. In principle, the logic behind the proposed change is sound. Given this logical background, much of the opposition to the tax has been what I would call suspiciously vocal.

Under normal circumstances you would expect a fundamentally logical proposal to attract comments like “it’s a good idea, but issues x, y, and z need to be addressed.” If opponents to the extension of FBT to employer-provided parking were advancing arguments of this type, and the issues they were identifying had merit, then I would not be writing this post. What does not wash, however, is how opponents to the FBT change seem to be 1) failing to acknowledge the issues created by the current tax treatment and 2) advancing highly emotive and apparently spurious arguments in support of their position.

The most emotive arguments are originating from unions. Unite leader Matt McCarten, for example, was quoted in the Herald as saying:

… the tax could see night shift employees lose their work car parks, forcing them to walk to their cars parked away from their workplaces in “at unsafe hours in some of the most unsafe parts of the city, risking assault and rape“. 

Which naturally causes you to think OH MY GOD PEOPLE ARE GOING TO GET RAPED OR ASSAULTED IF THE GOVERNMENT EXTENDS FBT TO CAR-PARKS. This is what I call an “FBT WTF” moment.

If people walking to their car after work are at risk of being raped or assaulted, then does it not also stand to reason that people walking to their home after work are at similar if not greater risk? And Matt M should know that many people employed in low-paid shift work in the CBD actually live in the CBD as well. The fact that these people can walk to and from work is possibly, just possibly, what attracts them to working there in the first place. Why does he seem to think that employees who walk to cars after finishing work are at greater risk than employees who walk to other destinations?

It may be that Auckland’s criminals are specifically targeting employees who drive to work. That would be rather clever; drivers certainly are on average less fit than their pedestrian-powered colleagues. In which case, maybe Matt M is right, maybe employees that drive to work should be seen as weak and vulnerable wildebeests limping around the CBD savanah while merciless criminals stalk them like hungry hyenas from the shadows. But putting powerful “Lion King” imagery to one side, one does have to wonder whether the risk of being raped or assaulted while you walk to your vehicle after work is quite as high as Matt M makes out.

To provide you with an anecdotal (but real) example, I have been walking home from the CBD late at night on many occasions in the last decade (usually alone, mwahhh mwahhh) and I’ve never had any of these hungry hyena criminals chase me. Now I do understand that I’m not the most attractive (or feminine) social-democratic watermelon in the fruit bin, but I do ride a girl’s bike. I mean goodness gracious, if the risk of being raped or assaulted was as high as Matt makes out then maybe we should require CBD employers fly their employees home in helicopters? Unfortunately not all of us proletariat have rich friends who own helicopters …

Which brings me nicely onto Banksie – who had this to say about the FBT changes:

“I think it is very damaging for small business, particularly in CBD Wellington or Auckland … CBD Auckland is struggling. Small business in the Queen St and precincts are really hurting. It is not easy.”

Oh really? A tax on car-parks is going to hurt small businesses on Queen Street? The same Queen Street that has, like, zero car-parks? Hmmm … can’t fault your logic there John. The other thing to note is the use of the word “small” in front of business. Is he right? Will the costs of the FBT change be borne disproportionately by small businesses? I think not.

Let’s put our thinking caps on for a second and answer this question: Consider two companies; company A which employs 1,000 people and company B which employs 10. Of these two companies, which do you think is more likely to provide free parking for employees? I think you’d have to be a deranged hyena to answer Company B. It seems obvious to me that large companies go for bigger, newer buildings that are far, far more likely to have car-parking attached to them. They also tend to be sucky employers who use taxpayer funded perks as a way of coaxing employees to stick around.

Here’s a real world case study, which demonstrates the (supposed) parking requirements for a NZ-based global dairy giant (who shall remain nameless), which is currently looking for a new corporate HQ in Auckland’s CBD:

Capture

This suggests F%&$#@~a want a total of 200 car-parks for their employees. In comparison, the company I manage employs about 10 people. And how many car-parks do we have? Zero, zilch, nada. There you have it: Another undeniable personal anecdote that is slightly less emotive than the arguments advanced by the opponents to the FBT change. More seriously, my gut feeling is that while SMEs do account for 80% of the commercial sector (i.e. they are a large proportion of all businesses), they probably do not provide an equivalent proportion of free car-parking for employees – hence they will be impacted disproportionately less by this change than big business.

Once one gets past the emotional hyperbole about rapists and small business, there is one somewhat substantive argument advanced by opponents of the FBT change in support of their position, namely the issue of “compliance costs”. High compliance costs are usually a valid reason to oppose a tax: After all most taxes are designed to collect revenue, so it would be pointless if the costs of complying with said tax outweighed the revenue that it generated. In such cases the Government would be better off taxing businesses through existing broad-based taxes, such as corporate tax.

But in this situation the compliance cost issue is, I think, a big fat red herring (BFRH). The reason it’s a BFRH relates to the very essence of FBT, namely that the tax is designed to stop employers from providing non-cash benefits, such as free parking, to their employees. And if employers stop providing free parking to their employees, then they won’t get hit with FBT and, by extension, they will avoid the dreaded “compliance costs”.

Stated differently, the opponents to this change are trying to portray FBT as a tax meteorite they cannot dodge.

In reality, employers do have a choice. And quite frankly they’d be stupid to keep doing what they’re currently doing, because in doing so they would incur a tax rate of 50%. Thus the whole idea of FBT is to stop employers from paying their employees non-cash benefits. The best way to avoid taxes on cigarettes is, you guessed it, to stop smoking. Or buy all your ciggies at the airport …

Anyway, my key point is that the compliance costs of extending FBT to employer-provided parking will, for most rational small businesses like mine (hah!), be close to zero – because they will stop doing it. Similarly, the revenue the Government earns from extending FBT to parking will be close to zero. But this does not mean the tax change is pointless from a revenue perspective, because the value of employer-provided parking will now flow through normal (broader) taxes, such as PAYE and – to a lesser extent – corporate tax. Both of which have lower compliance costs than FBT FYI.

Interestingly, it seems David Farrar over at KiwiBlog came to a similar position. Social-democratic watermelons of a feather flock together huh?

Ultimately, the suspiciously vocal opposition to the extension of FBT to employer-provided car-parking seems likely to originate with organisations that are guilty of putting their hand in the tax cookie jar – and now they are squealing like little piggies about the lid possibly being slammed shut. When you look at the issue in a relatively objective light then changes to the tax treatment of employer-provided parking seems to be something that obviously needs to happen at some point (NB: Opponents would do well to start every sentence on this topic with a statement to that effect, lest they wish to undermine their credibility even further).

I’m sure there’s a worthwhile debate to be had about whether FBT is the best way to slam shut the car-parking cookie jar – and that’s a debate I’d like to have. Without the hyperbole.

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84 comments

  1. Wait for central government to trot out the “but Len told us this was necessary” line. They’ll then graciously back pedal because of the “opposition” to the proposal and chuck in a few barbs about how you’ll never get Aucklanders out of their cars. This proposal was never meant to fly, which is why there has been no rational debate about it. The only disappointment is that Labour didn’t see it as an opportunity and jump on it. But then, maybe they can see the play.

    1. Patrick, we received specific requests from readers who wanted us to comment on the FBT issue. If you would like to provide feedback on what you like or don’t like, then please use the email addresses listed under the “contact us” page. In your email you want to be a little more specific about what you’d rather read about and we’ll see if we can accommodate those preferences.

        1. Important to remember that that is a personal taste view, others will find your preferred style too dull… There are virtues too in writers sticking to their own voice [especially amateur writers like us], and if we didn’t feel passionate about the subject I guess it just wouldn’t get written…. there are other things we could all do with the hours around midnight!

          But it is, like so much else, a question of balance, we work hard to try to keep this site fresh and informative.

  2. I rather suspect this is a bit of a panic whipped up by media organisations like TVNZ and the dear old New Zealand Herald (which has serious form for indulging in this sort of stunt: ‘Democracy under attack’ stuff), worried that they’ll be the ones paying FBT. If Dunne’s proposal did get through, which sadly I doubt it will, the Herald will have to pay FBT on John Roughan’s car park and that would be appalling. It would probably eat up all of ABN’s profits for the next decade.

  3. Maybe a better idea, considering the relatively insignificant amount expected to be collected, would have been to remove the FBT from employer provided PT passes? At least the fairness could easily be debated then.

    1. That’s one option – although in doing so you’d then be favouring cars and public transport over other transport options, such as walking and cycling. It’d become a classic case of “where do you draw the line”, e.g. does my employer buy my shoes that I use to walk to work?

      For this reason I would not really support expanding the tax loophole around employer-provided parking to other modes, because you’d simply expand the problems into other areas and undermine the PAYE system even further. The primary objective should be to preserve the PAYE tax base, with the goal of creating a level transport playing field somewhat secondary (albeit important).

      I think there’s better ways to level the transport playing field than by compromising the integrity of your tax system, e.g. direct subsidies.

      1. Granted but at this time, and I don’t own or use any carparks that would fall under this tax, I think a carrot approach to PT is warranted. Cycling, well, NZTA’s masters need to up the walking and cycling portion of the transport budget substantially but that’s another whole discussion. If the goal is to get people to use PT rather than take their cars to work, thus ensuring congestion, what tools are available that could attract people rather than force them so to speak? The new trains and double deckers are a start but I think if an employer is able to give an employee a PT pass in lieu of a carpark, and not be taxed for it, then great.

        The people who are most going to loose out in this FBT parking situation are the employees and in particular the lower skilled employees as they wont have the bargaining power of those who are most needed by an employer. Just my take on it.
        As for PAYE, in Australia, as an employee, there are numerous tax claims you can make re: work clothing and tools etc whereas in NZ these were taken away back in the 80’s. Unless you are in the high achiever, high income bracket in NZ, being self employed (and thus being able to claim expenses) is the only way to go. PAYE just props up the wealthy who pay a substantially lower portion of the total tax take (by having companies, investments etc).

        1. P.s. The goal of these tax changes is to protect the tax base; it has nothing to do with getting people onto PT.

          Although of course the distortion that it corrects is a positive consequence of taking that approach. If you want to encourage PT, walking/cycling or whatever then you’re better doing it directly and transparently via subsidies rather than tax mechanisms. The tax system should be flat, simple, and strong.

          Lest we end up like the U.S. where self-interested lobbying from various groups has created enormous loopholes in their tax code . I support increased investment in PT and walking/cycling, but I would not support compromising the tax system to achieve those ends.

          1. Stu,
            Can’t argue with the protecting the tax base argument, but surely the IRD has bigger fish to fry than this relative tiddler?
            I can think of several areas the IRD should target first, such as (5 in no particular order):
            Student loan repayment dodgers
            Delinquent parents missing their child support
            Tax dodgers who used trusts to shelter their incomes from PAYE and paid themselves low incomes to avoid PAYE
            Making sure guys like Google and Facebook pay fair company taxes on NZ profits
            Lower the GST free threshold through efficiency in Customs so that goods bought overseas for $400 or less are GST free

            And targeting any one of these will produce way more than the $17m talked about for car parks in short order without pissing everyone off while doing so.

            This plan seems to be to be trying to shoot fish in barrel from close range with a shotgun, sure you may kill a fish (or several if you’re lucky)
            – but the collateral damage e.g. splash back from that will will cause more downside than the upside.

            I have a lot of uneasiness over this and the uneasiness I feel over this is not that the proposed rules are unfair
            – its that they are simply going to be too hard to do right and equitably – and that is what is driving a lot of the opposition except its not being expressed directly in those terms.
            .
            Fairness and predictability are hallmarks of a good tax system. When both employers and employees are siding together on something you have to wonder if maybe you’re on a hiding to nothing and while you might win the “tax revenue war” it will be a Pyrrhic victory as you’ll lose the battle for the “hearts and mind” of both sets of major tax payers along the way.

            And the long term effects of that may be much harder to avoid – if it entrenches a attitude amongst tax payers of legitimising the art of tax minimisation as “fair game”.

            And as the IRD is only going after the Auckland and Wellington “CBD” (which the definition of Auckland CBD BTW is being drawn much wider the usual “moat” definition used around here based on reports I read – parts of Khyber Pass Road will be in the FBT Tax net), you can see that even the IRD indicates that its too hard to do for the rest of the country.
            Which is unfair – along the line sof a regional fuel tax or a local “sales tax” – something governments swear they won’t tolerate.

            So you either tax every car park used at any time of the day, month or year, by any employee – or you don’t go there at all.
            Theres no half measures for practical and other reasons like fairness.

            Yeah maybe some people can’t articulate that view, but its a valid view, and one the IRD would pay to take heed of.

            The other thing is that you don’t think if this tax comes in that another rules could be relaxed e.g make PT passes FBT free as a way to level up the playing field?
            – On the basis that the IRD doesn’t allow employees to deduct the cost of the travel to/from work from their taxes.

            While from a tax purist point of view that is right but its not necessairly the best outcome,
            The idea of some taxes like Tobacco and Booze taxes is to discourage certain behaviours and encourage other behaviours.

            So why should not the FBT tax be lifted on PT passes to encourage take up of PT and get cars off the roads?
            After all the Government is taking large chunks of “tax revenue” as a whole and forking it over to fix up congestion problems caused by said cars (usually at peak times)
            – meanwhile overlooking how diverting a small portion of that revenue into PT uptake could achieve better outcomes.

            Yes its perhaps distortionary, but we’re talking a small amount of distortion here and its for a greater good.

          2. Thanks for your comments Greg – and yes I do agree that there’s probably more important things to change.

            Not sure I agree that it will always be a tiddler though: Perhaps the practice is increasing (and would continue to increase) if FBT rules were not changed? I would have thought that IRD would be prompted to act as much by trends in behavior than levels (gotta love calculus). So in some respects I would prefer a “preemptive tax strike” like this that seeks to address the problem early on.

            Ideally it would be universal, but the reality is that there’s not a functioning market for car-parks anyway but the CBDs. What we have here is a quite unusual problem: A tax loophole that is highly spatially concentrated. I don’t believe it’s completely true to say that taxes need to apply nationally – because CBDs are quite unique little places where very specialised taxes may be required.

            That raises an interesting point: Perhaps the best way to manage this would be for central govt to pass legislation that enabled local councils to address the issue, with some form of revenue sharing mechanism?

          3. Greg N, a small correction to your list: trusts don’t provide a tax shield as they are taxed at 33% from the first dollar, whereas personal tax is progressive up to 33%. So they actually provide more tax, not less. You might be thinking of the good old days when the top personal marginal rate was 39% (or 66% in Muldoon’s era).

            The main purpose of a trust is to simplify estate planning, ie the trust potters on irrespective of whether the settlor is alive or dead.

            I don’t have a problem with the others on your list, except the last one (GST on low-value imports) would probably also have higher compliance costs than tax receipts – there’s a reason why there is a threshold.

          4. “That raises an interesting point: Perhaps the best way to manage this would be for central govt to pass legislation that enabled local councils to address the issue, with some form of revenue sharing mechanism?”

            I suggested that exact point in the original topic last week. Seems to me that delegating the issue to local councils as a by-law (like parking enforcement is) is a better way to handle it.
            As the councils then have lee-way to apply the rules on a better basis that the IRD could.

            I would expect though that the FBT rate would be fixed by the Government nationally, and not decided by any one council.

          5. Greg N: “The other thing is that you don’t think if this tax comes in that another rules could be relaxed e.g make PT passes FBT free as a way to level up the playing field? – On the basis that the IRD doesn’t allow employees to deduct the cost of the travel to/from work from their taxes.”

            I’ve been thinking about this point… And I vaguely recall that when I lived in the Netherlands, travel to work was tax deductible since it was considered a necessary business expense. It didn’t apply to me since I usually cycled to work, but some of the guys I worked with were claiming public transport expenses or vehicle mileage. One of my colleagues drove in to Amsterdam every day from almost the Belgium border so that was a significant amount. So is this a necessary expense that workers must incur in order to earn income like tools or self-paid training? I think so, and therefore it should be deductible in my opinion.

            Conclusion: Parking shouldn’t incur FBT, but should be tax deductible. As should bus fares if you’re taking the bus to work.

          6. Jonno,
            Yes the GST threshold is there for economic reasons – my suggestion here is that customs improvement their systems so the current threshold can be lowered.
            Every $10 of threshold lowered is hundreds of millions of (now) GST-able revenue bought into the system.

            So you can see that if you can widen the net there by say $100m, then the GST on that amount will be $15m – about what is proposed here on the FBT.
            So in one measure you can do as good for the tax base as the FBT measure does, without 110 minutes of tax compliance time “costs” per “transaction” as is suggested.

            The be fair, I have benefited from this GST free threshold, buying a lot of stuff overseas GST Free.
            – I don’t see its my problem as a Tax payer that the NZ Customs service revenue collection operations are inefficient and that they need a high threshold of $400 before they’ll act to collect any GST.

            They can and should lower this threshold with better processes and technology (including ease of payment of the GST).
            And doing that would level the playing field for retailers here compared to those overseas who don’t pay any Taxes to the IRD here.

            Trusts used as shelters is the high personal tax threshold problem you allude to so is historic (for now), but is something the IRD needs to tackle as a past historic issue
            And while it doesn’t exist now as company and personal taxes are aligned – sooner or later corporate taxes will go down – then the problem will resurface.

          7. Greg N, yes I did pick up on your point about efficiency, and you may be right. I think that Customs also charges a processing fee on top of the GST, so if the number of transactions increased markedly that fee should come down. My understanding is that retailers are the main complainants about GST-free imports, the same retailers whose mark-ups are eye-watering, ie where the same product, even with shipping (which is included in the GST calculation), GST and the processing fee is still well below local retail (even online retail). Now I don’t believe that NZ retailers in general are profiteering, so that leaves overheads, including compliance costs, as the primary culprit.

            The current company tax rate is 28% so theoretically it can be used as a tax shield, except that as soon as you draw down salary it’s taxed at your personal rate. In an ideal world all income from taxable activities would be taxed at the same flat rate – perhaps with a tax-free threshold – and tax avoidance would disappear overnight (I know I’m ignoring international considerations, but for most of us plebs it would simplify life no end).

  4. While there has been some WTF comments, there have been real critisisms as well. First off, I agree this is a loop hole. However:

    1: It will increase compliance costs. Not sure if it will be 110minutes per carpark however.
    2: It will increase complexity. In the past week, I have driven into work after hours to do a bit more work. I parked in the carpark. Does that mean FBT should be paid on that? Or only FBT on employees who park there 9-5 weekdays?

    1. yes some reasonable objections have been advanced; they’ve just been drowned out by the noisy emotional arguments.

      1. P.s. And I should say that it was not my intention to tar all objectors with the same brush – just the noisy ones. Apologies for not making myself clear in the post.

  5. You guys get equally passionate and ridiculous sometimes when someone suggests something thats not directly PT supporting so ease up a bit aye.

    1. Vague references to “you guys”, “sometimes”, “someone”, and “something” are not helpful. If you can’t be more specific about your complaints, then I’d suggest you don’t comment because it comes across as you simply being negative about the site. If you do have specific details about comments that you’re unhappy about then use the email address are listed under the “contact us” page.

      Only other thing to mention is that we’re a voluntary blog; not a commercial website. From what I have seen, if any of the bloggers are asked to comment in major media outlets (and they are from time to time), then they are more circumspect about what they say compared to what is said online – to make sure it’s not misinterpreted. Here there is more opportunity to use colourful language, because if a post/comment is misinterpreted then the meaning can be clarified in subsequent comments. Not so much in a newspaper …

      P.s. If you can’t see how this post is deliberately poking fun at ourselves them knock me down with a sarcastic feather.

      1. I was just pointing out that this post is very hypocritical.

        In terms of the humour it is easy to see the sarcasm however that makes it no less patronising.

        1. It’s not hypocritical unless you have evidence of me (yes I am a real person who does not use a pseudonym) making extremely emotional statements to Herald reporters. Do you? Nope.

          1. This website is full of such evidence, maybe not you personally, that’s what makes this place such an enjoyable read.

          2. Dan,

            Websites arent sentient beings and are therefore incapable of hypocrisy.

            Regarding the post – I think it is entirely appropriate. Polemics (if you want to define it as that) are entirely justifiable in these sorts of situations.

            The political discourse in NZ is full of people basically getting hysterical about such issues in order to tap into the publics’ emotions and score points. It is good to cut through that once in a while (or actually as often as possible).

          3. The post quotes a couple of reasonably sensible comments and then goes and ridicules them. If this site was meant to be some form PT satire then I guess it would make sense, however most of the time it is very serious not taking kindly to any form of banter.

            It would seem its a rather classic case of the people in the glass house throwing stones.

          4. this site is simply a collection of posts contributed by several like-minded individuals, of which I am only one. So I’d appreciate if you did not lump us all together.

            And here’s some advice (which I also give to myself from time to time): Try to be more specific with your criticism, otherwise you just come across as a dick.

          5. All I did was suggest that you ease up a bit, hardly a criticism to take offence to then come out guns blazing.

          6. Because he had cherry picked two comments claiming them to be emotive and then gone on a massive rant attempting to ridicule them whilst being about 10 times more emotive himself.

      2. true that it is a voluntary blog, but a number of the moderators and contributors work for the same company and are quite happy to throw about links to their own ‘Commercial’ work, reports and objectives. Biased much?

        1. ooooh I love the way you cast vague aspersions about our professional day jobs. Makes us sound much smarter than we actually are.

          Again for the record (it’s been said before):

          – Kent L, Nic R, and I work for the same company;
          – Matt L, Patrick, Peter M, and Mr Anderson do not.

          If I write a report, and I think it’s interesting, and it’s made publicly available, then I may write a post on it. Shock horror!

          And by the way, if you don’t like something I’ve written (or anyone else) gather up some courage and let us know all the gory details. We’re happy to acknowledge our mistakes and change things if needed.

          Can’t speak for the other bloggers but I don’t have much time for anonymous and venomous little comments like this. You should be ashamed.

          1. to be fair when complaints are made, most of the time they’re shot down & than they belittle them.

          2. I think it’s important to draw a distinction between two types of “complaints”:

            1. Complaints about the blog and/or our conduct that are A) lodged via email and B) backed up with evidence are responded to respectfully in due course. Hell I’d be prepared to meet with people to discuss their issues; on the other hand
            2. Complaints about the blog made in threads are (especially by people using pseudonyms) are not viewed favourably and for good reason: Not only are they almost always off-topic, but they rarely any detail that allows us to respond.

            dan again’s complaints, from what I can tell, fall almost universally into the second category.

          3. Stu, to start with I didn’t complain but rather suggested you ease up on your abuse. Given my comment was about your post, my comment was both in topic and you had provided all the require evidence.

            That pretty much summed up all I had to say, rather than taking my advice into consideration you have preceded to make a series of abusive post to and about myself and others. This has not only been off topic but provided further evidence of your abusive tone.

        2. I’d be intersted in discussing the merits of the AWHC with you guys (regular posters) you all seem to have not read the plans very well when you do make posts on it.

          1. Well you guys seem to ignore the cycling and pedestrian components and grossly overstate the new motorway capacity, you ignore the removal of the vic park flyovers and act as if the trains are a maybe. I wonder if any of the blog posters have actually read the NZTA proposal at all sometimes.

          2. The proposed cycling and pedestrian components are on the bridge we have right now, they don’t require a tunnel. The rail tunnels are a maybe. They can be built at the same time, or left for later, and if they’re left for later they can of course never be built at all.

          3. I’ve studied the plans pretty closely and even questioned the CEO of AT about the seriousness of the rail portion and I’m sorry but you’d be fairly naive to consider the rail part anything other than a cute PT-wash addition with no actual work or budget from NZTA on it at all. Anyway, regardless of the ‘lipstick on the gorilla’ the additional road lane alone are nothing other than a disaster for both the city and the Shore.

            Anyway, Skypath is coming so that excuse is slipping away….

          4. http://awhc.nzta.govt.nz/

            The NZ Transport Agency has identified an additional Waitemata Harbour crossing (AWHC), operated in conjunction with the existing Auckland Harbour Bridge (AHB), as the most appropriate solution to provide flexibility, resilience, and sustainability for the expected growth in Auckland’s population and traffic.

            Together, the existing bridge and the additional crossing will provide 14 lanes for general traffic, public transport and walking and cycling.

            In 2008, five regional partners – Transit NZ [the NZTA’s predecessor], Auckland and North Shore City Councils, Auckland Regional Council and the Auckland Regional Transport Authority – undertook a study to consider 159 different crossing options. Their recommended preference was for four bored tunnels: two to carry three lanes each of highway traffic and two to each carry a single line of rail, located between Esmonde & Onewa Road on the North Shore and Victoria Park in Auckland City.

            Following publication of the New Zealand National Infrastructure Plan in March 2010, the Minister of Transport asked the NZTA to develop the 2008 Study further, with a focus on the costs and economic efficiency of the different forms of crossing, either bridge or tunnel. These investigations would develop a business case for an AWHC which would support the progression of a crossing through the subsequent development, consent, design and construction phases.
            The business case aims to provide the NZTA with a clear understanding of the costs associated with each form of crossing and whether this represents the best value for money in the transport, economic, social and environmental setting. The Business Case will provide a greater level of robustness in the decisions that lead up to the construction of an AWHC.

            This was the first thing I found. Looks to me like the NZTA plan at the moment is pretty clear, if you are going to talk about what is planned for the AWHC you should talk about what is actually planned, not what you project will happen.
            I agree that this project is wrong but very few people who knock have done much if any research.

  6. I can understand complaince cost headaches. My company just has pool parking. First come first served. Some people miss out and have to pay for themselves. FBT for an indiviually assigned car park is simple enough, but FBT on a pool of car parks that not everyone is guaranteed to use is a big headache. How woult that work?

    1. Hi Ari,

      From what I understand it might work as follows:
      1. If company decides to provide a pool of free parking then it pays IRD an amount per car-park per year.
      2. If they don’t then they will pass costs onto the users in some way.

      With regard to #2 the easiest way to do this would be to get employees parking in the car-parks to pay the company for every day that they park. To minimise transaction costs you could simply tally it up over a week and then reconcile the balance at the end of the year.

  7. It’s a strange proposal because it will only cover parking in the CBDs of two cities. If parking is a fringe benefit then it is a fringe benefit for people in the rest of the country too. I can’t think of any other tax that applies geographically.

    1. Well, there’s rates, which are not only different in each council, but often vary within councils too.

      But the reason it applies only to the two CBDs is because those are the only places where parks cost enough to qualify for the tax. The limit is pretty high – $210 per month. There are plenty of parks in the Auckland CBD that don’t even cost that much (and so won’t be taxed).

  8. “Matt M should know that many people employed in low-paid shift work in the CBD actually live in the CBD as well.”

    Er, what? Matt M knows well enough that many of them are cleaners commuting in from Manurewa or similar, who occasionally have to beg the boss for the $6 bus far home. I actually find his arguments about how this is going to hit low-paid workers hardest convincing.

    1. If the risk of being raped/assaulted *might* exist for the *fraction* of employees who have to walk *slightly further* to their cars in the event that FBT rules are changed, then it *definitely* exists *right now* for *all* the people who walk and/or use PT to access their jobs in the city centre.

      And given that rates of walking and PT are higher 1) among low-income demographics and 2) trips to/from the CBD, then there’s probably a greater number of pedestrians/PT users that are at risk than the risk to employees who drive. Consider the numbers of cleaners that commute to the CBD from Manurewa versus the number of students who walk to the city centre from western suburbs, for example.

      That’s why Matt’s comments seem extremely out of place – all of a sudden he’s making a whole lot of noise about a potential problem which, if indeed it is a problem, always has been a problem for a whole lot of people that aren’t affected by this change. Reasonable?

  9. Good point.
    And don’t let the naysayers who want this blog to read like an engineering report get you down. All of the writers’ personalities show through, and that’s a good thing (even if in this particular case it appeared you wrote immediately after watching a Lion King re-run 😉 )

    1. Thanks, I really appreciate the positive feedback. Sometimes the venomous little internet vipers that trot out endlessly negative comments really do wear me down.

    2. I’ll second what NCD said. (Though being immersed in health, I filtered her/his name as non-communicable disease…). This is perhaps the most factual and evidence-based blog in the country; you need only compare it to any of the major political blogs which are all opinion and rarely marshal a strong collection of facts on any issue.

  10. More on this from Peter Dunne in the Herald:

    The FBT (Fringe Benefit Tax) Action Group argues that the tax would take 110 minutes of an accountant’s time to administer each employer- provided carpark each year. That, it says, adds up to a total compliance bill of $30 million a year across the almost 200,000 carparks in the Auckland and Wellington CBDs the tax would apply to.

    I’d say that is a top end estimate then. There is an implied rate of $81.82 an hour for an accountant to work it out the FBT but equally I’m sure the work could be done by someone on $40 an hour or less. ( 110 minutes x 200,000 carparks = 22m minutes or 366,666 hours. $30m / 366,666 = $81.82) And of course compliance costs will be zero for businesses that don’t have carparks as part of their employment packages. If the compliance costs really are high, then why not pay the employee a carpark allowance as salary?

    On Unite’s point, how many nightshift employees have a carpark included as part of their employment package anyhow? Wouldn’t most just be using the visitors carpark, or paying for their carpark personally? Not saying that there may not be Unite workers genuinely disadvantaged by this, but there seems to be a fair amount of hyperbole in the arguments so far.

    1. Y’know, it occurs to me that 200,000 carparks is rather a lot. More than the number of people working in the Auckland and Wellington CBDs, and we know that a number of them take public transport. Are there really that many car parks? Where do these figures come from?

      1. Very good point. And not a small number (the majority?) are paid carparks, so not relevant to the tax.

        This figure is being compared against $17m raised. Which almost definitely means the amount raised is based on a far different number of carparks than the cost amount. If we take the 200,000 as read, then the revenue per carpark must be 17m/200k = $85 per car park per annum. I am going to assume an average marginal tax rate of 30c, which I think is reasonable. So that would mean the market value of each carpark averages 85/0.3 = $283pa. Where can I get one of those carparks!!!???

        Seriously though, my quick google gives me a rate of $50 a week for secure carparks in Auckland CBD (sounds about right). 50*52=$2600

        So comparing 2600 to 283, something is out by an order of magnitude. The only field I know where being out by an order of magnitude means “about right” is estimating the permeability of aquifers. In this case however, they are clearly talking nonsense.

      2. There are approximately 60,000 car parks in the Auckland CBD in total, including private office and residential, publicly accessible buildings and on-street.

  11. Its Dead

    Tax Status Of Carparks To Remain Unchanged
    ===============================================
    Press Release by New Zealand Government at 2:03PM, 18 Mar 2013
    ———————————————–

    The Government will not continue with a proposal which would have changed the way some employer-paid carparks in central Auckland and Wellington are treated for tax purposes, Finance Minister Bill English and Revenue Minister Peter Dunne say.

    1. so much for encouraging informed debate! This was soooooooo set-up to fail, I think Peter Dunne’s been done.

    2. Yes, and as I said above – its small potatoes when there are some bigger issues around:
      And Dunne acknowlegded that when he said:

      “We will continue to focus on fairness in the tax system ***but we also think that there are bigger and more important tax matters for officials to focus on***.”

      Exactly guys, storm in a teacup.

  12. Most of the poorly paid shfit workers are highly unlikely to have paid spaces (except perhaps Sky City which was mentioned in the artlicle). Usually it is the well paid executives who get free parking so I am surprised the proposal got as far as it did before being canned, given that most of them would be Nat voters. Personally, I would like to see more of the “perks” of highly paid jobs taxed but sadly those are the very people with the resources to wriggle out of paying more.

    I must confess to being a little irritated at Stu’s dismissal of the fears that people have about walking around late at night. I haven’t met him obviously so I could be making an incorrect assumption but he appears to be a very fit and confident man in his twenties. Can I politely suggest that his experience of the world may differ from someone who is not all of those things? I suspect he is right when he suggests that the city is not as dangerous as people believe but his perception of risk is affected by the fact that it is pretty unlikely that he will be raped while walking down a dark street. Probably the chances of a woman being raped in those circumstances are low too but that possibility is something that women think about and men tend not to. It does affect behaviour. And it does affect your perception of safety.

    1. Apologies if it came across as being dismissive; that was not the underlying intention.

      My point – as stated above in response to Deloras’ comment (http://greaterakl.wpengine.com/2013/03/18/fbt-wtf-suspiciously-vocal-opposition/#comment-62580) – is that if those fears exist, then they are impacting on many, many more people than just those who are driving to work. For that reason, Matt’s link between assault/rape and FBT on car-parks is rather bizarre, as it seems to ignore all the other people walking around that may also be at risk from the same criminals.

      If we have a problem with safety (or perceptions of safety) in the CBD, then let’s get that fixed – so that everyone is safe. But I’m pretty sure there’s hundreds of ways to do that that are more effective than preserving employer-provided car-parking.

  13. Rather a shame today’s decision. Lots of champagne corks at Tournament and the group’s PR firm tonight – cheers fellas. The silver lining for me is that when this resurfaces it can be done more comprehensively.

    I’m not an ardent anti asset sales kind of guy, but I am left wondering today how the government can respond instantly to a short vested-interest campaign (which only piped up 1 year after consultation began) but at the same time dismiss a petition of over 300,000 citizens. It really reeks of double standards.

    ps. Stu I appreciate the odd opinion-piece mixed in with the analytical ones too. Obviously I’d always expect opinion to be fact-checked here as applicable (unlike the other editorials I read, ahem, NZ Herald).

  14. An interesting side anecdote to F(^(^%$%. When they moved from their airport based head office to take over the old KPMG building in the CBD they had a revolt from their staff. It was almost like a union thing. The ultimatum was given to management that the only way staff would be happy to move from the airport location to the CBD was if every staff member was allocated a supplied car park in the CBD.
    They moved.

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