Small Business Minister and Act leader John Banks yesterday criticised the Government's proposed taxation of employer-supplied carparks in Auckland and Wellington as "petty" - criticism that makes it more likely National will pull the unpopular policy.

"It just doesn't make sense," Mr Banks told the Herald. "I'm very hopeful that it's going to run out of steam."

If the Government doesn't pull it, Mr Banks could be forced to vote for a measure he opposes as part of Act's agreement with National to support confidence and supply bills.

But he hopes it will be withdrawn before it comes to that.


"I think it is very damaging for small business, particularly in CBD Wellington or Auckland," he said.

"CBD Auckland is struggling. Small business in the Queen St and precincts are really hurting. It is not easy."

It looked like the Government wanted to tax "everything that moves" and most things that moved made money for the country and paid taxes, he said.

"If you kill something that moves, there's no tax, no jobs, no investment, no confidence and CBD Auckland is out of business."

The measure is part of the Taxation (Livestock Valuation, Assets Expenditures, and Remedial Matters) Bill, in the name of Revenue Minister and United Future leader Peter Dunne.

The finance and expenditure committee will continue to hear submissions on the bill today, including from the FBT (Fringe Benefit Tax) Action Group, comprising the Northern Employers and Manufacturers' Association, the Property Council and Tournament Parking.

The group argues that the compliance cost would be in excess of the fiscal gains, estimated to be $17 million of fringe benefit tax a year.

It said an extra 50 per cent fringe benefit tax on employer provided carparks meant for each car park space, CBD businesses would have to pay $250 a month or nearly $1500 a year.


Carparks provided by commercial operations would cost $400 a month for each carpark, or over $2350 a year.

Labour has not yet decided whether it opposes the carparks measure, finance spokesman David Parker said.