UNJUST POSITION

Bay of Plenty Beacon, Volume 6, Issue 66, 20 April 1943, Page 4

UNJUST POSITION

NON-ASSESSABLE INCOME LIABILITIES INCREASED There can be no justice in a prill-* ciple of taxation which singles out certain persons for a penal tax welll above that being paid by other per-* sons with a similar income (says a statement'by the Associated. Cham-» bers- of Commerce of New Zealand)* This is what is done by the provisions of Section ;>■ of thei Finance Act, .1942, which alters the basis of computation of the amount of income tax payable by taxpayers who derive both assessable and non-as-sessable income. Apart from the l'act that the noa-i assessable income involved (insofar as it represents company dividends) will, in most cases, already have been subjected to the maximum rates of company taxation (14/0 2-3tl in the £), the incidence of the new method of assessment is illogical, and. certainly does not lit in with the Government's, contention that those, who receive non-assessable income are better able to bear the weight of additional taxation. Capacity to Pay On the other hand, however, the liability of those persons whose in-, come is wholly non-assessable has not bi\ft in any way affected, notwithstanding that the amount o£ their income—and same as that of the taxpayers whose liability has been substantially increased. But the vital consideration therefore their capacity to paj'—is that the* non-assessable income in question has already been subjected to its full measure of taxation in the hands of the companies concerned—in most eases at maximum rates—and. it is entirely wrong in principle I that such income should again be | subjected to taxation in the hands ! of shareholders. If the shareholder is to be taxed then the company should be. exempted, or if the company is to be taxed then the share-* holder should be exempted. The revenue should not, however, seek to a PP'y the rule, both ways. There is no argument that cam be put forward in justification of the differentiation that is made by the present taxation provisions between different people. It is not to be denied that war conditions require heavy taxation, but there is a world of difference .between (1) the weight of taxation, and (2) its incidence. What is of national concern is, that the incidence of taxa-* tion, even when the weight, of it has to be heavy, should be as' equitable ns possible, and not discoufr* age individual eirort and. national production. Crippling Business The new basis of taxation lias a crippling effect on business people in particular. The bulk of these are men who are experienced in trade, and whose services are valuable. Men retired from active business and who recommence activities solely on account of the war, will be i taxed up to 18/- in the £, so that a man earning £2000 is left with £200'. which .is not much more than tbo allowance under the Social Security scheme to people who are unable to work at all. Not Understood It seems clear that the full effect of the altered basis of assessment was not fully understood by members of Parliament when the Act was passed, by the Legislature • last year. A number of them have since expressed their surprise at the effect of the legislation, and many reprfr* sentations have been made, to the Associated Chambers by taxpayers who are only now realising the implications of this highly complex provision in last year's Finance Act. It is hoped that the interval between the adjournment of Parliament and its resumption in May will be utilised, by the Government in framing legislative amendments to adjust the unjust position that has been outlined.