Most New Zealanders accept we need to do more to address climate change. Many of our councils are declaring a "climate emergency". However, when it comes to incentivising Kiwis to change, our emergency response has broken down.
If we're serious about getting the brakes off, we need more than rhetoric. A few small changes to our current tax regime could immediately give businesses and workers a much-needed boost along the road to a healthier planet.
While we're using the vehicle analogy, why not eliminate fringe benefit tax (FBT) for public transport or electric vehicles? Employers providing employees with public transport passes or EVs would not incur FBT, making petrol or diesel vehicles a less attractive proposition.
This idea was suggested by the Tax Working Group but appears to have been put on the backburner as it works its way through the tax policy work programme.
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To sweeten the deal further, lowering the depreciation rate for petrol or diesel vehicles and raising it for hybrid or electric vehicles would allow companies to deduct more tax
Employees could also get more in their back pockets from simple changes to the mileage rates. Current mileage rates allow workers to claim 79 cents per kilometre for the first 14,000km travelled in a year. This rate applies whether your vehicle is electric, hybrid, petrol or diesel, but EV drivers get less after that first 14,000km. Why not boost the mileage rates for electric vehicles and lower the petrol vehicle rate, to encourage frequent travellers to choose an EV next time they're car shopping?
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Enabling employers to provide tax-free loans to their workers for purchasing EVs would make cleaner vehicles even more attractive, especially if the "business use only" limitation were removed, so employees weren't required to keep a log book to prove they were using their cars only for work.
While the Government's recent introduction of subsidies for "cleaner" vehicles and higher fees for gas guzzlers is a start, in Norway, more than a third of new car sales are EVs, and the number is growing at a rapid rate. The Norwegian government has achieved this not only by waiving hefty import duties, registration and sales taxes for buyers of electric cars, but owners also avoid road tolls, get free use of ferries, and – most applicable to Kiwis – get to use priority bus lanes in city centres. These incentives will eventually be replaced with higher taxes on traditional cars – the classic carrot and stick.
Let's not forget incentives that encourage us to stay off the road entirely, removing the stress of the daily commute as well as cutting emissions. Rewarding employees who work more than, say, 20 hours a week from home could transform our roads. This could be achieved by introducing legislation that lets employers provide a tax-free payment to employees who mostly work from home, which effectively recognises the costs they incur to run a home office. If every employee worked just one day per week from home, road usage would decrease by 20 per cent.
These ongoing running costs and maintenance are a significant expense for business owners, too. While it's a big ask to completely retrofit a building with the latest sustainable design, any improvements to make offices more energy efficient, such as insulation, solar energy systems, energy-saving lighting or tap fittings that save water, should be fully tax deductible.
Many of us want to do better for the environment and don't know how, or feel too busy and time-poor to seek out new opportunities to do so. Lowering tax rates for sustainable investments would make taking positive action easier. That way our money could not only work for us, but for the planet too.
It won't take another Tax Working Group, but just a few small tweaks to our tax policy to start making the changes we want to see. If climate change is indeed an emergency, let's act now.
• Andrew Dickeson is director, tax, at Baker Tilly Staples Rodway