The first e-mail
Two years ago, the National Party campaigned against Labour’s Jacinda Ardern/Chris Hipkins’ outrageous “Ute Tax”.
Well, in the most astonishing turn of events, we can confirm that National’s Climate Change and Revenue Minister, Simon Watts, has instructed officials to develop new tax rules that will smash ute owners even harder than Jacinda Ardern’s original Ute Tax!
As reported by Radio NZ:
Under the change, farmers with a mixed used farm ute costing $70,000 will be hit with an annual [Fringe Benefit Tax] bill of $6370, at the proposed 26 percent rate for petrol and diesel vehicles.”
Farmers are buying vehicles at Fieldays, looking forward to a reduced cost thanks to depreciation deductibility, but oblivious to the tax grenade coming their way in 12 months,” [Findex tax advisory partner Craig Macalister] said.
“Worse still, any vehicle over $80,000 – such as a $75,000 ute with $6000 in extras – will be classified as 100 percent taxable.
Labour’s Ute Tax hit only when you bought a new ute. Simon Watts’ Ute Tax 2.0 will see the tax payable each and every year!
Currently, if you use a ute mostly for work, you can keep a logbook and avoid FBT, provided private use is genuinely minimal. That’s only fair.
But Watts wants to remove the logbook system and slap a flat tax on nearly every ute in the country, regardless of how it’s actually used.
He’s getting IRD officials to say it’s about ‘simplification’. Yeah right! It’s nothing short of an on-farm tax grab.
Labour’s Ute Tax maxed out at a one-off $5,175. Simon Watts version is much harsher.
Say you buy a Ford Ranger “Raptor” (currently listed online for $86,990). Under the current rules, assuming it’s mostly a work vehicle and personal use is incidental, no FBT is payable. Under Simon Watt’s proposed tax rules, $6,318 or even $8,213 will be payable in Fringe Benefit Tax in the first year alone! (The exact amount will depend on the driver’s marginal/income tax rate). It’s not principled – it’s nothing short of a $100+ million tax grab from farmers and tradies.
For utes worth $80,000 or more, FBT will be deemed to apply at 100% even if there is no personal use or benefit. Watts going on? Has this National Party Climate Change Minister gone rogue?
This isn’t some IRD brain fart or just officials getting ahead of themselves. According to documents uncovered by the Taxpayers’ Union yesterday afternoon, Minister Watts has been proactively asking IRD to do work on hiking FBT on utes and work vehicles!
Do National Party MPs even know Watts going on?
Just last week, at National Fieldays, Christopher Luxon and Nicola Willis were literally bragging that they scrapped Labour’s Ute Tax!
And here is one of the National Party’s social media posts from just two years ago:
The second e-mail
On Thursday night the Prime Minister’s Office stepped in and overruled Simon Watts.
Within six hours of our email, Christopher Luxon’s office went into damage control and has now totally ruled out Watts’ “Ute Tax 2.0” and the proposed Fringe Benefit Tax raid on work vehicles.
After we blew the whistle yesterday, our phones ran hot from media interested in the story and asking for the Ministerial papers.
What became clear is that despite the Climate Change and Revenue Minister instructing IRD officials to develop the policy – and even had IRD consult with the tax industry on implementation – most of Simon Watts’ Cabinet colleagues just had no idea!
We understand the issue took Luxon’s office by total surprise. 🤦Heather du Plessis-Allan picked up the baton (interviewing the Federated Farmers spokesman) and was first to get the U-turn out of National (listen to it unfold here).
Heather’s producer was provided the following statement from Luxon’s press team in response to the Taxpayers’ Union and Federated Farmers exposing Watts’ Ministerial direction and the IRD’s proposals:
The National Party also rushed out an e-mail last night to its rural members which locks-in the policy U-turn (click to open larger version).
When the documents literally show that IRD officials were instructed by the Minister of Revenue to progress an FBT Ute Tax, the Nats now claiming that those who expressed concern are “misinformed” is political spin at its worst.
It’s almost from the Ardern-era. 😉But who cares? As soon as the National Party realised what Simon Watts had been quietly orchestrating this tax grab for months, they saw the political risk and acted quickly to overrule Watts and kill the policy.
The Prime Minister’s office could not be clearer, Simon Watts has been overruled and the Ute Tax is dead. 🪦
Thank you for your support – especially to the many thousands of people who used our email tool to contact National Party MPs yesterday. Chalk it up as another policy victory. 😇This win proves again: when taxpayers raise their voices, politicians are forced to listen – even to rein in their own rogue ministers.
Thank you for your support.
Jordan Williams
Executive Director
New Zealand Taxpayers’ Union.