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Bill English, Peter Dunne

18 March, 2013

Tax status of carparks to remain unchanged

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.

“The proposal was made as a matter of fairness, because in general we consider that cash and non-cash benefits should be taxed the same way,” Mr English says.

“While we do not resile from that general principle of fairness, we do need to be pragmatic. This was considered likely to be one of those proposals from IRD where the cost of compliance, compared with the likely return, made it not worth pursuing.”

Mr Dunne says officials’ estimates of the number of carparks which would have been affected were far fewer than the 180,000 that was being talked about publicly.

“Even so, for expected revenue of about $17 million, and the difficulties around ensuring the policy would not have adversely impacted other workers, it seems sensible not to proceed,” Mr Dunne says.

“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.”

Ministers said that the issue was under consideration at select committee and had attracted considerable comment.

On balance, Cabinet has decided not to continue with it.