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This report investigates the degree to which current tax polices influence travel behaviour (perhaps unintentionally) in ways that contradict strategic policy objectives. It also evaluates potential tax policy reforms that could help increase efficiency and equity.

Current New Zealand fringe benefit tax (FBT) policies encourage employers to offer company cars (including associated expenses such as insurance, fuel, tolls and parking), and employee parking subsidies, since as untaxed benefits they are worth more to employees than their cash wage value. Analysis of New Zealand data concerning vehicle purchase and ownership patterns, commute travel patterns and crash rates, and international research, indicates company cars tend to be larger and less fuel efficient. Employees who receive company cars tend to drive more annual kilometres, are more likely to live in more dispersed, automobile-dependent locations, and have higher crash rates than motorists who own their vehicles. The larger size of company cars appears to increase the overall average size and reduce the fuel efficiency of the future New Zealand vehicle fleet. This research also indicates that employees who receive significant parking subsidies (through FBT exemptions) are more likely to drive than use alternative modes of transport.

Keywords: car parking, company cars, employer-provided car parks, fringe benefit tax, travel plans, work-related vehicle