Review of the tax-free ‘perks’

Press, 9 April 1979, Page 20

Review of the tax-free ‘perks’

By

CEDRIC MENTIPLAY

The direct action taken by Christchurch air engineers in defence of their fringe benefits has produced a Government reaction which is bound to be unpleasant for many more workers. The Minister in Charge of the Inland Revenue Department (Mr Templeton) said that because of the experiences of the last fortnight the Government would be looking again at the proposition of taxing allowances generally. In an interview he had been reminded that the Minister of Finance (Mr Muldoon), talking to accountants, had answered a questioner that the Government had looked at taxing fringe benefits and had “given it away’’ because of its complexities. “There is sufficient interest in the subiect to warrant a rethinking.” Mr Templeton said, “though, looking back over the previous papers on the subject, particularly the 19?5 report commissioned by the Labour Government. I believe it is a very difficult area to assess. What is clear is that payments in cash are easier to assess than are payments in kind.” Mr Templeton made it clear that the investigation

being made by the Commissioner of Inland Revenue (Mr T. M. Hunt) was not being made as a result of instructions from the Government, or from any member of it. He himself was not aware that Mr Hunt was working in that area, though he did know that an inquiry was proceeding in the general area of allowances. “This is an area within the determination of the Commission,” Mr Templeton said. “He is operating within the law, and has been looking at these things since the whole area started expanding, I think about 1975. His discussions with the air groups have been entirely within his jurisdiction. His letter to the Engineers’ Union, I believe, went out about January 10.” Mr Templeton said that the Commissioner had not consulted him about the possible sensitivity of that particular area. “After all, he had worked through the waterfront, some of the meat areas, the Bank of New Zealand — I knew generallv about it — but it was not felt that it was something that should come specially to the Minister. “It is, after all, his determination. I would be hopeful

that the groups involved would respect both the law and the importance of the Commissioner. He is a little like the Commissioner of Police. Once he is operating within his law he does not look to the Minister for guidance. "If there is a doubt about it, he might well advise the Minister of the problem. In this case he did not. I am hoping that the discussions will indicate to the groups concerned that the Commissioner has been very fair, that it is a complex and difficult area, and that people go along with it. If they do not, the penal procedures are there, and will be used.” Asked if he thought that this would be the likely result of any further discussion with the engineers, Mr Templeton said: “I cannot give any indication at all. The Commissioner has made it clear he is not prepared to discuss the details of the issue. He feels it is a confidential matter, and I think it is very important that we should leave it at that.” The Minister said he had made a study of recent Australian examination in the field of fringe benefits. ‘‘lt has proved to have a great many complexities, and to have aroused a good deal of criticism — just as we are

finding with the air groups now. What I hope is that those groups respect the Commissioner’s right; and that in their next negotiations deal with their problems as they see them, rather than seek to undermine our taxation system and the integrity of the Commissioner’s responsibility.” Asked whether in his opinion, it was fair for an air engineer to be taxed on his travel allowance to drive to work, while a company representative might drive to work in a car which was a non-taxable allowance, Mr Templeton said: “It is not a matter of equity in that particular situation. It is true for any Western country that the law for many years has been that travel to work is the responsibility of the individual. The way he gets there is a matter for his decision. “If he is paid by his firm, that is generally regarded as part of his income; if some other method is used, whether bus, car, or taxi, it is not taxable. We must keep that point in mind. “I would hesitate to rule on the equity of this. I am no Solomon; neither am I the Commissioner. But this is one of the areas we are going to have to look at and clarify.”