Compliance costs kill tax plans

Compliance costs on the controversial tax on employees' car parks and technology provided to workers by employers has led to them being dumped, WHK tax principal Scott Mason says.

''It is the Inland Revenue Department's job to come up with these things. From a policy perspective and fairness, there is a fair gap and some people have been taking advantage of that.

''The Government has looked at the compliance costs, and the message the tax sends, and decided it's not worth the hassle,'' he said.

Prime Minister John Key said there was virtually no chance of the technology tax going ahead.

Labour Party revenue spokesman David Cunliffe said the plans for the ''petty tax'' on iPad and cellphone use was another embarrassing back-down by the Government and another slap down for Revenue Minister Peter Dunne by Mr Key.

''The National-United Future confidence and supply agreement lies in tatters. What has Peter Dunne left to contribute? His tax ideas are petty penny-pinching and completely passe.''

Employer groups, unions and others who opposed the car park tax through the FBT Action Group estimated it would set back businesses about $30 million in compliance costs for revenue of just $17 million a year.

Mr Mason said the Inland Revenue Department had been looking at the ways in which cellphones, computers, laptops and tablets were being used. There was a general exemption on work tools worth less than $3000.

''The problem is with any exemption, there are ways to get other benefits. You get employers saying you need to take a pay cut, but we will give you a cellphone. There is a bit of wage and salary substitution going on.''

The same logic had been applied to the car park tax but the Government had realised the administration costs of collecting $17 million were greater than that, Mr Mason said.

There would be some private use involved in the issue of technology, but compliance costs would be high to collect the tax.