In March we saw Government back away from Revenue Minister Peter Dunne’s proposal to introduce tax on inner city car parks and work smartphones, laptops and tablets.
Outrage amongst business leaders and unions over the car park tax led to rare level of unity and the establishment of the FBT Action Group which includes CAANZ, the Property Council of NZ, the EMA, Tournament, the Unite Union and the Council of Trade Unions.
Business NZ isn’t convinced of the merits of proposals to tax employee allowances either – and in particular opposed the idea of taxing communication devices.
In FBT review submission to Inland Revenue, Phil O’Reilly, Business NZ chief executive, said the rationale for the introduction of FBT in the first place was for it to act as disincentive to employers offering non-cash benefits to their employees at time of very high marginal tax rates and the wage freeze.
As O’Reilly pointed out, circumstances have changed significantly since the mid-1980s. “The difficulty of determining what is work and personal time may be undermining the important principle that employees should not be taxed when there is no private benefit.
“Blunt tax changes in this area could lead to employers restricting teleworking, or even restricting the use of communications devices because of tax compliance costs. Given the need for greater use of technology and innovation, this is the opposite of what should be happening,” O’Reilly said in press release.
In February, we also saw the tabling of member’s bill – The Affordable Healthcare Bill – which calls for the removal of FBT on employer-paid health insurance premiums. The premise of this Bill is that those employers who contribute to provide healthier workforce shouldn’t be penalised.
At the moment employers are stuck between rock and hard place; coming under increased pressure to contribute to healthier workforce while being penalised for doing so with FBT – something not applied to the compulsory insurance levies currently paid to ACC.
Today, employers contribute to health insurance premiums for 640,000 working New Zealanders. They do this because there are clear, documented benefits in having workforce with fast access to healthcare.
The introduction of FBT over 25 years ago dramatically reduced health insured employees by hundreds of thousands. These were tax-paying New Zealanders who fell back on the public system.
In short, removing FBT on health insurance will encourage more employers to again provide this as benefit to their employees; align tax treatment of health insurance premiums with the tax treatment of ACC levies; and reduce strain on the public health sector.
Before anyone gets too excited, it’s important to remember that this is private member’s bill and may never eventuate. However, there is slow but sure groundswell of support for the removal of FBT on employer-paid health insurance.
Carl Stent, chair of the NZ Association of Accredited Employers, says that taxation on employer contributions to employee wellbeing is counterproductive and disincentive to increase health initiatives that arise out of the workplace.
“Our members take personal interest in their employees’ health and safety by directly managing work-related injuries through the ACC accredited employer programme. For more than decade FBT has limited the interest of accredited employers to extend lessons learnt into wider employee wellbeing initiatives,” says Stent.
Southern Cross has for some time advocated for measures which might help restore balance in our health system. The initiatives in this Bill have the potential to save hundreds of millions of dollars in public sector health costs over the next decade and increase workplace productivity. Employers are what makes the country tick; it makes economic sense to support them. M
Peter Tynan is chief executive of Southern Cross Health Society.