Taxing employer-provided car parks

Posted on March 20, 2012 by


A recent NZTA report suggests that employers who provide free car parking for staff could be taxed. NZTA says that the availability of free car parking for employees undermines attempts to reduce congestion and increase the rate of use of public transport  in our three biggest cities (Auckland, Wellington, and Christchurch).

”The availability of ‘free’ employer-provided parking in the CBDs of New Zealand’s main cities provides a direct incentive to drive to the very destinations that are most congested and best served by public transport”-NZTA Report

NZTA justifies the need for a tax on employer-provided car parking based on the fact that such parking currently has a tax exemption, which the NZTA report says has a significant (and, presumably, negative) effect on transport choices, with untaxed benefits apparently totaling at least $675m annually. The NZTA recommendation  in the report is that the government investigate changing the fringe benefit tax (FBT) to include employer-subsidised car parking, which seems pretty logical.

An FBT is a tax on benefits that employees receive as a result of their employment, including those benefits provided through someone other than an employer. Free car parking is undoubtedly a benefit employees receive from their employers and it is estimated that more than half the country’s workforce have access to free parks provided by their employer. This really illustrates the effect the subsidisation of car parking has on the transport choices New Zealanders make.

I recently blogged about this very issue, speculating on the effect free parking has on transport choices, and how it essentially amounts to a subsidy for driving. I never really considered the FBT, although it does only encompass employer-provided car parking – free car parking for customers at malls and other businesses is a slightly different, though related, issue when you bring the FBT into it. I do think that employer provided car parking, along with all commercial/retail car parking and minimum parking rules need to be reviewed.

This all seems a rather strange pro-public transport stance being taken here by NZTA, which is at odds with the view many have of it as a roads obsessed entity. Certainly it seems clear that employer-provided parking should be subject to the FBT, which means the government is missing out on a significant revenue stream, and it has the effect of increasing costs through increased congestion and undermining investments in other, more efficient, transport modes. The possibility of this going anywhere in the near future is anyones guess, but a review would bring this, and the bissues around it, into the spotlight. Elsewhere, Canada, Sweden, Australia and Ireland all tax employer-provided car parks in some capacity.

Posted in: Car Parking