19 August 2013

Arrangements to reform support arrangements for British Ministers were garnered from a number of jurisdictions before improvements were  announced last month. There was general endorsement of changes. But there seems little public sympathy for tax free advantages senior officials have been receiving, and which have attracted the attention of the Commons Constitutional select committee.

Yesterday media reported that the Select Committee chair was critical of fringe benefits received by senior civil servants which instead of being taxed as occurs in the private sector, were having tax paid by their departments. ”Highly unusual” provisions were identified where agencies were paying tax so officials could receive rent-free accommodation, first class rail travel and cars.

Those receiving tax paid perks include the Cabinet secretary (who shares his Toyota Prius with the Head of the Civil Service), the head of NHS and the head of the Serious Fraud Office.

Providing a car (and driver) for the Cabinet secretary costs British taxpayers more than $175,000 annually. Ironically the Cabinet secretary has been responsible for implementing major budget cuts on departments of up to 25% and consequential losses of hundreds of thousands of public sector jobs.  The Cabinet Office confirmed that it has paid tax for the car he uses for official travel between Westminster and his home.

The NHS head has reportedly had benefits in addition to his salary which incurred tax of about $100,000 annually.

This type of benefit has been taxable for 37 years and fewer than 0.5% of employers pay the tax for their employees.  In so doing they create a further benefit which itself must have tax paid on it.

In New Zealand the disclosures of expenses each six months by chief executives include any refunds of fuel and other maintenance costs for cars.  Chief executives generally own their vehicles and can recover actual costs.