19 Mar 2013

PM hangs up on taxing personal phone calls

11:39 pm on 19 March 2013

The Labour Party says the Government is right to abandon the idea of taxing personal calls made on work cellphones.

Prime Minister John Key has all but ruled out the proposal, a day after dropping the idea of taxing carparks provided to employees in central Wellington and Auckland.

Labour's revenue spokesperson, David Cunliffe, says neither proposal should never have been considered.

Mr Cunliffe says the Government's handling of its tax proposals has been very sloppy.

Though Inland Revenue is considering whether to tax personal use of smartphones, tablets and laptops that are funded by employers, Mr Key says there's virtually no chance such a change will be made.

And during question time in Parliament on Tuesday, Revenue Minister Peter Dunne during took a similar line.

Mr Dunne says the suggested tax is part of a consultation document, not a government proposal.

earlier suggested that a tax on personal calls made on work phones could be more controversial than a dumped proposal to tax the use of workplace carparks.

Inland Revenue last month finished public consultation about taxing personal use of smartphones, tablets and laptops funded by employers.

Mr Dunne acknowledged at the time that this could provoke more of a reaction than the carpark tax, but said part of the consultation is to gauge public reaction, and to see how it would work in practice.

He said - before Mr Key commented on Tuesday - that no final decision will be made until the consultation process is completed.

On 18 March, the Government also dropped its plan to introduce a new tax on carparks that employees in central Auckland and Wellington get as part of their salaries.

Revenue Minister Peter Dunne says that would have raised about $17 million a year but the likely cost of compliance makes it not worth pursuing, and officials have more important tax matters on which to focus.

Mr Dunne says the carpark tax was proposed because the Government considers it only fair to treat non-cash benefits in the same way as cash benefits for the purpose of taxation.

He says the Government does not resile from the general principle of fairness, but it also has to be pragmatic: $17 million a year is a small amount and not worth the effort of claiming.

Last year Mr Dunne said the Cabinet had agreed to focus the tax on the Auckland and Wellington central business districts, where the benefits of a carpark are the greatest.

A lobby group has since claimed the tax would add $1500 a year to the cost of a carpark provided on an employer's own premises and $2400 for a commercial carpark space.