This tax is not popular, even more unpopular than tax in general

The bat shit crazy FBT tax amendments put forward by Peter Dunne are uniting all sorts of people. Who would have thought that big business and unions would unite?

And now the only people more rapacious in billing than lawyers, ad agencies, are uniting to work for free to oppose the tax.

A group of 100 advertising and media agencies is preparing to get its creative juices flowing as it joins the fight against a controversial new tax on car parks.

The Government plans to extend a fringe benefit tax (FBT) of almost 50 per cent to employer-provided parking in the Auckland and Wellington central business districts from April next year.  

An unusual alliance of unionists and business groups has banded together as the FBT Action Group to fight the proposal, which they say is petty and discriminatory.

Founding members of the lobby group include the Property Council, the Employers and Manufacturers Association (Northern), and Tournament Parking, with strong support from Unite Union.

Now the Communications Agencies Association of New Zealand (CAANZ) has thrown the weight of the roughly 100 agencies it represents behind the campaign.

Many of the creative agencies represented by CAANZ have central-city offices, close to their major clients.

CAANZ boss Paul Head said his members would enjoy applying their creative talents in opposing what seemed to be a “petty and quite selective tax”.

I would imagine that some time soon Peter Dunne is going to be standing on the naughty spot explaining to John Key why he is making a dick of him with this silly tax.

The government must surely be preparing to either dismount swiftly from this particular dead horse that Peter Dunne is flogging hard or possibly shoot the horse out from under him.

I wonder then what David Farrar will say after his Bill English-esque defence of the tax yesterday.

 


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  • Sir Cullen’s Sidekick

    Whale Oil – Thanks for taking up my favourite topic. I hope the Whale Army rips Peter Done Deal Dunne into pieces. This is a crap tax and a distraction John Key doesn’t want at this point in time. I hope he soon makes a statement that kills this tax once for all. Even Mad McCarten got 2 minutes of TV air time the other day. McCarten talking about tax…see the irony of the situation….This could be Peter Dunne’s last act of stupidity before his political demise…

  • GregM

    Dunne has completely cocked this one up. It should be the other way around, a car park for employees should be able to be tax deductible as a legitimate business expense.
    And he needs a haircut, fuckin numpty.

    • Sir Cullen’s Sidekick

      GregM – Hopefully Dunne’s pointy head is screwed right back into his body by the Naked Emperor. I just cannot see the logic of this stupid tax and this gives some ammunition for the dead beat opposition

      • Mr_Blobby

        The deadbeat opposition will be advocating for a 100% TAX.

        • Sir Cullen’s Sidekick

          Yes I agree :-) Nonetheless not this tax, that too from a National Government!!!!

    • unsol

      It is tax deductible. FBT is designed to stop the rort re those who sneak private expenses (driving company car after hours or parking in work slot after hours) into their business accounts.

      In fact I am fairly certain that car parks you pay for (not those on your own or leased land) are already subject to FBT….as they should be. Remember the more expenses people claim the less tax they pay..which puts more on the rest of us.

      So can someone please clarify what the issue is? I seemed to have missed it…!

      • GregM

        If you own it, it’s not. I can claim a deduction to the value of the mortgage interest but that’s it. If I was renting / leasing a carpark for staff, it is tax deductible but then we get hit with FBT. My wonderful employee cannot piss about spending two hours plus on several buses to come to a part time job. If I want to employ her then I need to provide a car park.
        And why just Auckland and Welly ? If it is such a fair thing, roll it out everywhere.

        • unsol

          Yes I am aware of the current rules…..I just can’t see up click re what the new change is. Is it being expanded to include leased car parks or car parks on the company’s own land? Sorry, not normally this nill!!!

  • peterwn

    Bill Birch helped mess things up for National in the 1990’s by letting IRD get away with introducing Labour’s draconian penalties scheme – so draconian that Mike Cullen had to partly undo it. Not only did he and other Ministers help lose the election, but they made it difficult for momentum to be quickly regained in time for 2002. Maurice Williamson’s crazy road privatisation idea was another turn-off – he should have shut down the proposal at a much earlier stage. Seems to me that National ministers need to intervene on this one fairly quickly to avoid upsetting its constituents. How can people be expected to help get a party into power when the party stands by and allows bureaucrats to poke them in the eye. When a proposal leaked to charge for local phone calls in the late 1970’s, the then Government rapidly told the Post Office to forget it.

  • Agent BallSack

    Peter Dunne is one of the reasons National may not win the next election. This tax, and the declaring that people temporarily living in Christchurch for the rebuild have to be taxed on accommodation will turn enough people away from National as to send them out of power.

  • David

    Actually its not such a silly idea, but not for the tax take reason. We have a serious problem in this country and its the distribution of business and its location in relation to its employees locations and this is one way to try and re-adjust it. It has nothing to do with FBT, or tax take, its should be about encouraging those buisnesses in central city to re-locate to cheaper areas to do business and at the same time areas where people want to live. The cost of fixing the public transport system is prohibitive, the cost of building more/wider motorways for ideally the 4 hours peak use a day crazy, and the cost of doing nothing is just creating a longer commute, more time in traffic. The obvious solution to this problem is get the buisnesses that don’t need to be central out of it. This might be one way. Get rid of carparks and make it so expensive to park that the cost of doing business is not worth it. At the moment those who make the decisions on where a business is located probably all have carparks paid for, so it means nothing to them. Lets look at the people complaining. Advertising companies, do they need to be central??. I have one nz wider retailor who uses a wgton based advertiser, so they don’t need to be central. Nor does a lot of other buisnesses these days. Part of the problem is the snob factor of “I want to have an office in ponsonby”, but the reality is do you need one, and what does it really cost to use it. The other option is to try a congestion tax. Try enforcing that one, and besides it then hits the customers who have no option if they want to visit a business, or it hits the lower employees who likewise have no control over where the business is located. While this method won’t be easy, and may not be practical, its part way along the lines we need to be thinking and discussing. How do we better distribute out city/country to solve the transport problems we are creating in Auckland. I doubt it will start that debate, but it should.

    • Thank you for your comment, hopefully someone will summarise it for me, other wise it will have to wait till this evening for the time to read it

      • bobby

        I’ll try > For the wrong reasons this tax has some merit – namely, we should be discouraging companies from having large, inner-city offices. Instead taxes or other incentives should make companies consider locating themselves elsewhere – Manukau etc.

        E.g. Think of how ludicrous it is that Vodafone is located – with most of its team – in the middle of the city. They could be located elsewhere and it would be a more efficient scenario for almost everyone.

        • David

          Well done Bobby, and apologies Whaleoil, it did end up a bit long.
          Yes Vodafone is a good example, and there are many others. Fonterra, Air New Zealand, the old Toll when it ran the rails at Smales Farm, and not at a Rail Hub somewhere, and the list goes on, ASB, Insurance companies etc etc. With modern technology now available the need further decreases.

          • John Q Public

            Half the Auckland & Wellington CBD population of office workers could work from home, but don’t, largely because bosses want them in their faces so the can boss them. I know of a sales based organisation (and there’re likely 1000’s like it) who insist their sales people turn up by 9 every day, irrespective of the fact business happens at the customers premises. That’s the paradigm that needs to change, and that’s where incentive measures should be directed. FBTing a car park isn’t the way to do it.

    • Auto_Immune

      I would agree that many businesses no longer need to be centrally
      located, but your argument seems to be downplaying how Auckland (and Wellington) are structured.

      The Auckland CBD is relatively central. Unless most employees of a organisation already lived in a specific geographical area, you would effectively increase the number of commutes across the city each day if businesses were to relocate.

      • David

        Yes, we have a central district in Auckland, but a lousy public transport system not set up for it. Wgton is in a better position thru its historic use of public transport and the confining nature of the green belt and the topography, but its reaching limits, or was until a lot of the government departments relocated.
        While it does mean there might be a lot of cross city communting, a lot might find it easier to live near where they worked. Historically that’s what we did before cars. How about if some of those buisnesses relocated to other cities. Is there any reason something like a data centre could not operate from somewhere like pokeno? eketahuna even?. Could we find nice, low cost, good housing in those areas?. good country schooling?. do we have to have a data centre in east Tamaki? Could Vodaphone operate from Whakatane? Whangarei?. The logistics of finding suitable staff might easy. Would we all not like to live 10 minutes from work, and in a house a section we love??

        • Agent BallSack

          It’s good in theory but a lot of those businesses are there for the very reasons you mentioned – the population. You would have to legislate certain size companies and above to move, for example Telecom – who could then sue the government for causing loss of business if ALL Telcos weren’t legislated equally. And not to mention I am not going to do business with a company in Eketahuna if there is one in Lower Hutt that will provide my needs.

          • David

            why would you not do business with a company in eketahuna if there is one in lower hutt that can meet your needs?. If the eketahuna company is able to offer the same level of service online, and at a cheaper price due to lower staff costs (no carparking FBT, no high property prices demanding high salaries (read the wow is me we can’t afford to buy in central Auckland stories), lower lease costs). Is it because of the snob factor that evades a lot of business these days. interesting, but one of the cheapest computer parts suppliers on an online comaparison site I won’t mention, is actually based on the west coast. Cheap overheads, cheap rent and bugger all commuting costs I guess. they offer courier and direct from the warehouse delivery, so pretty much same day delivery in Auckland. And why does someone like telecom need to be where the population is?. There is no reason these days.

          • Cremster

            Quality people have the freedom to choose where they work. More quality employees will choose to live in a cosmopolitan city with a benign climate and tens of thousands of other quality people to socialise with. A company that wishes to attract such people would be better placed to situate itself near to where quality people wish to live.

            On a separate note, while I oppose this tax, it does occur to me that those employees who choose to drive to work and park for free are receiving a benefit that the employee that walks or buses to work does not (yes I know the bus passenger is subsidised by ratepayers but that’s not the point here). Does the employer who provides free parking also contribute to the bus passenger’s fare or the walker’s increased shoe costs? If so the latter would surely be considered fringe benefits and yet the car park is not…

        • DangerousE

          A perfect example of this idiocy is Fonterra’s proposed new head quarters. $100m+, 200 on site car parks, and 300 third party car parks. I dont quite know why they need to be in the cbd, particulary as they are a dairy bussiness. Surely they could have something built a little further south that was far better value, state of the art purpose built even? But I guess you dont get harbour views anywhere else, and its much more distinguished being inner city, far far from any smelly farms.

      • bobby

        The way it works in most places in the world is where there are good jobs, people will live or move to for the sake of convenience each day. If Vodafone moved their main non-senior staff out to Manukau for example then Manukau would become more attractive for the people who are willing to do those jobs.

        What is the difference of a person from Avondale driving to the CBD each day to work or a person from the Mt Albert driving to Avondale each day to work etc etc? A lot – the worst peak-hour congestion areas would be alleviated by more companies not being in the CBD – a benefit for all.

      • Auto_Immune

        @Bobby202:disqus @disqus_qwok0mHgMB:disqus – Fair points made. I’d argue that there are too many vested interests impeding such moves from occurring en masse (I’m cynical like that), but then we’d be going full-circle to David’s original comment; where maybe more stick is needed (the FBT) for things like this to occur.

        • David

          Yep, auto immune. And since local government’s mandate is to look after the local interests they are hardly likely to offer a big corporate a financial incentive to go to another town to work, even if it does mean less infrastructure costs in the central city. The increases to the local ratepayers in increased stormwater, sewer, roading etc of intensifying Auckland central is enormous. the local stormwater is simply not built for it and already large parts of thecity have no stormwater system, but rely on soakage pits. People find it costs effective to increase density on their sections and flick off the back with a 20k stormwater system to connect to the new council system WHEN its upgraded at ratepayers expense, while we have lots of capacity in the new suburbs. Development contributions do not cover this. Think of the saving on lens railway if we moved 10% of the corporates to the new manakau city centre?, and the savings on roading. Likewise we move another 10% north and no longer need the underground. The only organisation that can take a global country wide look at the best interests of the country is central government, so central government needs to drive this. The tax is not necessarily the best way, but it might be the only stick they can really use. A cunning local government might offer subsidised rent/leases if they controlled the land.

    • Mr_Blobby

      You are right. and wrong. At the end of the day you know and I know that at the end of the day, the bottom line is. It is all about the TAX.

    • johnbronkhorst

      Agree with much of what you say. But the fact remains, businesses will open where it is convenient to them. If you want a job, travel.

      As for FBT, this law seem to capture something that seems to have been missed by FBT. It is of course a fringe benefit and under the law should be taxed. Having said that, I disagree with the law completely. FBT should not be charged to businesses. Companies should be allowed to negotiate contracts to suit both the employee and employer.
      eg I may accept a package of $100 000 per year. made up as follows
      Salary $70 000 cash ex tax cost to company $70 000
      car park $10000 per yr value cost to company $8000
      Health insurance $15 000 per year cost to company $12 000
      TOTAL to me $100 000 cost to company $90 000
      Company gets better productivity and can expand and employ more people and I get what I want.
      The govt. charges 28% of $30 000…less PAYE ie $8400 but that will be available for growing/ to be spent in the economy (incurring GST of course).
      ALL WIN

      • unsol

        Can you please respond to my comment above (reply to Greg)….I thought car parks were already subject to FBt…just the same as you can already claim them as an expense..?

        • johnbronkhorst

          As far as I know, car parks are on your lease (as a company) how you use them is up to you. So officially they could be reserved for clients. They are then claimable against taxes as part of your lease. Therefore it is about proving that they are part of an employees salary package, as to whether they are considered for FBT.

    • BR

      Never lose sight of the purpose of taxation. It is to pay for those government services that are essential, and which everyone has a stake in.

      Any taxes that are implemented for the express purpose of discouraging behaviour that the politicians disapprove of, are essentially fines that are levied on activities that are legal.

      Bill.

    • Sir Cullen’s Sidekick

      National = No or very low tax. Sheep = Tax and spend. END OF STORY Bro

    • unsol

      Well put!

  • Patrick

    This is bullshit as is taxing employees for using their company laptops for non work purposes. This sort of nonsence will cost National dear come election time.

    • unsol

      Doubt it – NZers are far too clever to cut their nose off despite their face. I cant see people ditching the Nats in favour if the left who are likely to try & tax us all sithin an inch of our lives…..after all, they took 9 years of massive surpluses & riding cost of living to even start to recognise the tax rates cut in far too early.

      This sort of nonsense as you put it has been going on forever, the law is just catching up to modern technology.

      And in fact the swinging vote of the bludging middle class masses (WFF) will no doubt see this is a winner as they always feel hard done by.

      • Sir Cullen’s Sidekick

        unsol – According to Sheep, Kiwis are ditching Nats in droves and are planning to vote for Labour in 2014. Now that Sheep has proved that Solid Energy’s demise is due to John Key, Nats are toast bro!!!

  • BJ

    Brian Rudman has an opinion piece on this in todays Herald – and I agree with his arguments in favour of this initiative. It is disingenuous to scream this down as a petty new small-minded tax collection – it is about encouraging fair contribution of PAYE – there is no compliance costs if there’s no fringe benefit offered. If you take the time to read the article you might just have a mindshift

    • Callum

      Exactly.

      What is the value of an employee?

      Lets say $100k (for ease of numbers). If you pay your employee $100k they are taxed on $100k directly. Totally deductible to the employer as you would expect.

      If you slip in a few benefits such as a gym membership or similar to say $5k, it is deductible to the employer but not taxable to the employee. Instead it is caught in the FBT regime which effectively taxes the value the employee receives as if it was received as cash. The employee values that benefit as if they would have bought it themselves which would have come out as $5k of post tax earnings ($7.5k of pre tax earnings) so it should be taxed on that same basis. Net cost to the employer is the same after FBT.

      Car parks are the same, if you would normally have to pay to park (or choose another form of transport) in order to work in the CBD then your employer paying for that park is transferring a private (non tax deductible) cost from the employee to the employer as a deductible expense.

      If you want to concentrate on the real tax cons going on, consider that charities don’t pay FBT yet many of the higher value ones have some VERY high paid executives shuffling private costs into business expenses.

  • Sir Cullen’s Sidekick

    I hope Emperor has some brain left behind still to pull Dunne back in line

  • Mr_Blobby

    The real criminals here are the City Councils who have failed to plan, failed to manage and the best solution for there failure is heavy handed enforcement, that puts money into there coffers. A reward for failing to manage and plan.

  • Phar Lap

    This is the same tax that the Lie-bour Party under sullen Cullen tried to bring in, in 2005.Peter Dunne was in bed with the Clark gang at that time.FFS.

  • Rodger T

    How about a tax refund for everyone that has to look at his stupid fucking bouffant hairdo?
    `Bout time those parasitic fuckwits in Wellington started to work for NZers than against us all the time .

  • Sir Cullen’s Sidekick

    Sheep is planning a car tax to get back at Naked Emperor. Ever car owner will be taxed $1000 a year for having this luxury compared to other Kiwis who don’t. This will be collected at the time of renewing your registration.

  • David

    When is the freeloader Dunne going to get off the gravy train and get a real job. What has he achieved in his years in Parliament. Zilch… that’s what. It is time this MMP prostitute quit Parliament. What a joke the fellow is. I resent the fact that my hard-earned PAYE pays this jackass.

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