Genter Julie Anne: Supplementary Estimates Taxation (Livestock Valuation Assets Expenditure and Remedial Matters) Bill — Second ReadingText is incorporated into the Bound VolumeGenter Julie Anne: Supplementary Estimates Taxation (Livestock Valuation Assets Expenditure and Remedial Matters) Bill — Second Reading[Sitting date: 26 June 2013. Volume:691;Page:11347. Text is incorporated into the Bound Volume.]Supplementary EstimatesJULIE ANNE GENTER (Green):I rise to speak on the second reading of the Taxation (Livestock Valuation Assets Expenditure and Remedial Matters) Bill. Tax policy is an opportunity to get better outcomes and to get smarter outcomes. The Green Party tax and monetary policy is precisely that: to use tax policy to encourage productive behaviours that are sustainable and that are good like work and like certain types of consumption and to discourage those things that are not good for a society and that increase pollution congestion and other ills. This bill was an opportunity to get a reasonably good outcome from tax policy. Most of the proposals in it are pretty minor; they are just tightening up loopholes.During my second reading speech I would really like to focus on one opportunity that has definitely been missed out of this bill. That was the opportunity to extend fringe benefit tax to employer-provided car-parks in the Auckland and Wellington central business districts. Unfortunately we did not get to have a very informed and rational debate on this particular issue. That is what I really regret because there was actually a report to the New Zealand Transport Agency that was published earlier this year February 2013 entitledCompany cars and fringe benefit tax—understanding the impacts on strategic transport targets . This report went through and thoroughly analysed what the different travel trends are. It analysed how many trips are by company car how many are resulting in an employer-provided car-park and the impact that those incentives of employer-provided car-parks have on people’s travel choices—that is the way that it increases congestion the way that it undermines our investments in public transport and the forgone revenue from that.Unfortunately when this bill came to the Finance and Expenditure Committee no one on the select committee nobody speaking to the select committee and not even the officials from the Inland Revenue Department were apparently aware of this report and the research that had gone into it. So it was not possible for us to have a debate using the information that had been collated by researchers on what the impacts of extending fringe benefit tax to employer-provided car-parking in the central business district could be and how that could be done in a way that would achieve the best outcome for businesses for Auckland and Wellington for our transport investment and especially for people living in the Auckland and Wellington central business districts. So that was unfortunate.On top of that we had some submitters from the FBT Action Group who came to the select committee with some quite surprising figures about the compliance cost of extending fringe benefit tax to car-parks. Their calculations about the compliance cost which have been referred to by previous speakers were based on some assumptions—first of all that the fringe benefit tax would apply to 200000 car-parks and that it would require 110 minutes per car-park per year which is pretty unlikely really when you think about it. But the worst part is that there are not 200000 car-parks. We have the numbers on employer-provided car-parks in the Auckland and Wellington central business districts. There are only 24000 employer-provided car-parks in the Auckland central business district. This estimate of compliance cost was done on an assumption of 200000 car-parks and that is 10 times as many. There are even fewer car-parks in the Wellington central business district of course than there are in the Auckland central business district. The vast majority of people travelling to work in the Auckland andWellington central business districts do not travel by car. Seventy percent of the people who work in the Wellington central business district do not travel by car; they come in by public transport walking or cycling. Over half the people who travel into the Auckland central business district at the moment travel by public transport walking or cycling.So the issue with the employer-provided car-parks not being taxed as a benefit is that it is unfair to the majority of people in New Zealand especially those working in the Auckland and Wellington central business districts who do not receive this benefit. They are taxed on their income. They would be taxed on their public transport passes if their employers provided those to them. The very conservative value of a car-park in the Auckland central business district is $2725 a year. The value of an annual public transport pass for all stages on average is $2700. So the subsidy for people to drive alone into the Auckland central business district is greater than the value of offering a public transport pass to people travelling into the Auckland central business district.Let us get back to the fundamentals. The purpose of fringe benefit tax is not primarily to raise revenue; it is to ensure that employers and others are not trying to avoid paying tax by providing benefits that result in distortions. The purpose of extending fringe benefit tax to car-parks was to achieve greater horizontal tax equity but the primary reason would be to get smarter transport outcomes. The best way to get smarter transport outcomes is to remove the unintentional subsidies that exist for people to drive alone to work in the Auckland and Wellington central business districts.There were some allegations that extending fringe benefit tax to car-parks would disadvantage people who worked shifts and could not possibly take public transport and people on low incomes. The reality is that the vast majority of people driving to work in the Auckland and Wellington central business districts are on high incomes so continuing to subsidise car-parks is actually a regressive move. It takes away resources that could otherwise be put to the general public of New Zealand. It takes resources away from them and says that no we are going to let people who are earning over $100000 a year in the Auckland and Wellington central business districts continue to drive alone in their company cars and clog up the roads rather than using our resources in an efficient way and making sure that the prices are direct.Ultimately this bill was a lost opportunity to have a debate. It is true that the way that fringe benefit tax was proposed to be extended to car-parks probably was not the most efficient way of doing that. We in the Green Party would have wanted to see—and we did ask officials for—some investigation on how this could apply fairly to car-parks throughout urban areas wherever their value is high as it does in Australia. Instead of being limited to one geographic region that was arbitrarily chosen it could have applied to car-parks valued above a certain threshold. That would have ensured that there was not the unintended consequence of incentivising development outside of the central business district where it would be harder to provide high-quality public transport.Another important thing that the Green Party would have liked to see were changes to the proposal so that it would not apply to shift workers and people on low incomes—for example cleaners who come into Auckland to clean at Skycity. There is no reason why it should apply to them. Ultimately they were just the minority and we think that those issues could have been dealt with had we had an informed and substantial debate. But we were not able to have that debate in part because we did not have the information available to us at the Finance and Expenditure Committee. The Government and Labour were quite quick to jump on the numbers provided by the FBT Action Group which provided quite erroneous numbers based on 200000 car-parks when there are only 24000 employer-provided car-parks in Auckland’s central business district.Ultimately this is about choice and we want to make sure that the tax system is fair and that it rewards people for making choices that consume fewer resources. That is a key tenet of Green Party tax policy: to make sure that the tax system is fair and that it does not subsidise behaviour that results in greater pollution greater congestion and greater health costs. I am going to read just a short section from this report on the benefits of addressing parking distortions: “Employer-provided parking is a benefit available only to those who drive and it has greater value in areas where parking prices are high. Those who benefit most in dollar value from free parking at work are those who also drive when congestion is worst. In addition the most valuable land used for parking is in the CBD and if primarily used for [employer-provided] parking is an unproductive use of CBD land. While it may not be a direct tax policy to subsidise people to drive and park in the CBD of New Zealand’s four main cities by ignoring the taxable value of employer-provided parking it is a policy by omission.” In other words it is the policy of this Government to subsidise people to drive into the central business district at peak times thereby undermining our investments in public transport and worsening congestion while foregoing revenue from high-income earners. Thank you.