Teachers caught up in car park tax wrangle
First came Novopay, now inner city teachers in Auckland and Wellington are facing being slapped with a tax on their school car parks.
Teachers have added their outrage to the chorus of voices opposed to a proposed extension of fringe benefit tax (FBT) to include employer-provided "on premise" car parks in the Auckland and Wellington CBDs.
The proposal before the finance and expenditure select committee would see these car parks taxed at a rate of up to 50 per cent.
While it was known government departments would be included in the tax grab, until now it wasn't clear that schools and universities also fall under the same net.
But a regulatory impact statement prepared by the Inland Revenue Department, which outlined options to tax salary trade-offs such as employer-provided car parks, confirmed they would.
The FBT would be based on whether the car park was available to an employee rather than whether or not an employee had a guaranteed slot.
It is part of a focus on taxing employee benefits paid in lieu of salary such as personal use of laptops and cellphones which has been slammed by tax specialists as "nickel and diming the tax system".
Teacher unions, already irate at the salary botch-ups under Novopay, said the tax is nonsensical and would leave a big dent in school budgets.
The so-called car park tax has already raised the ire of employers' associations, the Parliamentary Service, small business owners, car parking operators, advertising agencies, and spawned the FBT Action Group - a rare grouping of the Employers and Manufacturers Association (Northern), Property Council New Zealand, car parking company Tournament and the Unite Union.
Advertising agencies are developing ideas for a pro bono campaign to fight the tax.
It's understood the backlash has caused senior government officials to distance themselves from the tax, shifting the heat to United Future leader and Revenue Minister Peter Dunne who is currently out of the country.
An independent report presented to Parliament's finance and expenditure committee last week estimated the increased compliance costs would add up to more than $30 million, dwarfing the $17m IRD had estimated it would generate in revenue.
The education sector's largest union, the New Zealand Education Institute, said the tax, due to come into effect from April next year, would take money from school budgets intended for children's education.
"The Government pays us money for education and now they are saying we have to pay some of that back for a tax on parking? Frankly it's ridiculous." said past-president Ian Leckie.
He said it was a requirement from local councils that schools provide off-street parking for teachers so the tax would be, in effect, forced on them.
Some schools have up to 100 teachers and generally each are provided with a car park on site, Leckie said.
It's likely the impact of such a tax would result in teachers shunning working at schools located within the CBDs in favour of those outside of the zone with free parking.
In Wellington, a number of schools fall within the CBD zone including Mount Cook Primary, Thorndon School, Wellington Girls' College and Queen Margaret College. In Auckland, Auckland Girls' Grammar is right on the boundary.
Stephen Day, communications manager for the Tertiary Education Union which represents about 10,000 staff, said some of his members had no option other than to park in the CBD and he wanted compensation for those who would lose "thousands of dollars of benefits".
Day said the Government should focus on closing down tax loopholes for large corporates rather than a tax on employee car parks.
So how much might the car park tax cost affected schools?
Staples Rodway taxation director Mike Rudd said IRD has valued car parks in the two cities' CBDs at $250 per month on average or $3000 per year.
Calculating FBT on $3000 at a rate of about 43 per cent - assuming the affected teachers are not in the top tax bracket - would lead to an annual tax bill of $1290 per car park. For a secondary school with potentially 100 car parks, that's a whopping tax bill of $129,000.
Alistair du Chatenier, principal of Thorndon School which falls within the boundary, said costs like that would blow a school's budget. In his case, with 15 staff and associated car parks, the bill would be over $19,000 per year.
"Wow. That would be something I need to talk to my board about," du Chatenier said.
Rudd said the tax bill would initially fall on employers but IRD said it would potentially be passed on in whole to employees over time.
Victoria University, Auckland University and Massey University all have campuses located within central business districts. However, all said staff now paid for their own car parking on site.
Auckland and Wellington CBDs were chosen first as the areas thought to have the greatest number of employees enjoying a car park benefit but this could change over time - presumably to include other areas - if the "value of the benefits rises elsewhere", Inland Revenue warned.
- © Fairfax NZ News