Little Hope Of Tax Reduction In Budget?

Chronicle (Levin), 5 July 1949, Page 6

Little Hope Of Tax Reduction In Budget?

s " ■ \ "According to reports, the Bndget is to be proceeded with on the u-slial date despite the vi'sit of Mr. Nash to the United Kingdom. This, allied with other information available from Mr. Nash, points to the likelihood at present of there being little to hope for from any change in taxation policy under the Budget for 1949-50, ' ' said the president of the Assoeiated Ohambers of Commerce, of New*' Zealand (Mr. Frank Wilson) today. " " ' Vs' ■" m "It appears that the -Government has learnt notliinkTrohf "|ke\, evil eifects — on productive effort and on the/eost/of : liying-^oi • excessive taxation over recent years," he added. . . . • ' .-1-5:

"Recently my association forwardedto Mr. Nash a comprehensive case with regard to the need for taxation reduction and' revision. This case was conipiled by a joint taxation committoe, which includes, in addition to represen,tatives*= of the -Assoeiated Chambers of Commerce, representatives of Federated Farmers, the New Zealand Manufacturers' Federation, and the New Zealand Eetailers' Federation, and we are all united in our ideas of how taxation should be overhauled and reduc^d. "We have now reeeived a re^ly from Mr. Nash, stating that our representations will be examined, but adding the cold douche that 'it is unlikely duriug the present session that much alteration will take place in legislation regarding taxation.' "This is incredible, and intolerable. We repeat publicly wRat we have stated to Mr. Nash, that " the time is Long overdue for . a substantial reduction in the scale of both direct and tpdireej^ -.tax^t.ipn. ffifr-.is tjb^h unjusth ?Kable .$j$jid economically /uhsound to cbhBilja^dihd^ . .. peacetinie : conditions the tremehdous Tntrden'i of taxation inipofpd uMe£/the stress/ of war conditinhs. *; '/ // ' ' Taxatioi/ as such, inevitably enters mto the eountry 's priee structure, and the exist'ing scale 'of taxation is a major cause of prevailing high prices on the oue hand, and the redueed pur-chasing-power of money in the hands of the people on the other. Industry, trade, and commerce bluntly decla*e "that high prices today do not result t'roin company profits or from the pro fits of producers and of private enterprise; those high prices are due in the largest degree to the penal taxation which the Government continues to , take from the poekets of everybody, \ directly and indirectly. I " Furtliermore, the Government 's policy of high taxation o^eratea. to deteat ^lta , owii: : ^av^ed/'/objeefiye | inereasinjg. the: valji^^ofy pidduc.tion oi ] gooda./and' s#'vi&hs|^ee^|6 tjiie: ^rinj.arj' of l^h .eitfployej'g. ' and 'empfoyees^ 't >efiort:.'isV profit, i or reward for such' effort. With a taxation scale which operates upon the : principle of raising the rate of tax I payable in respect of additional in- ( come due to extra effort or expanded production, however, the process in- f volves a direct negation of the princi- t ple of payment by results. * , - ? ' ' The.rexisting taxation scale is so »

sharply progressive that ihe net.retura ation of that part of the anhuityr which was equivalent to a-, p'eturn of | .the capital investment inyolved. s /.•; convicted and- discharged> For • being for increased production is, . in -many instance's, entirely inhdeqilhte;-- •Th® maximum rate of income tax and so'tiul security charge payable in the-'case of persons is 15s 3d in the £ in . respect of earned income and 17s in the £ in respect of so-called 'unearned' income, whilst in the case of companies affected by the graduated scale the effective rate of tax payable on additional pro fits derived is in some instanes as high as approximately 16s in the £. "Moreover, these are peacetime rates of taxation, operating at a time when everyone agrees that increased production is the only real answer to the country's existing eoonomic probleims. It is not surprising, in the circumstances, that many producers and traders adopt . the view that the net return for the extra , work entafled Is not worth the added risk, woriy," and effort." '' " ' ' Mr. Wilson added that ihe Joi^t Taxation Qominittee had also made .p it a detailed case to the Minister of Finance in f avour of . 1. Granting a speciaT exemption ' (additional to the life insurance allow-: ance) in respect of amounts paid b.v wav of social security charge, so as tc> remove the anomaly of taxpayers hac-' ing* to pay tax on tax. 2. Abolition of the super-tax on socalled "unearned" incomes of 33 1-3 per cent., this charge being held to be indefensibly nnfair and unjust. 3. Removal of dOuble taxation caused by the inclusion of " non-assessable " income for the purpose of arriving at the amount of income tax payable, since shareholdeis were therebv required to pay again a tax on top of that which had been paid already by the company. 4. Abolition of ."proprj^ei^rv eoivipany /'"taxaftidn, "so' to1 ' enafelfeerXoanded production tq be, gngaged in. 5. The ex'f.dhsiorc companies, wit'i-; ?ut delav, of " the.. ■ " step " system of , income, tax which pperates ,-in /respe"tS jf persons so as 1 to remo-ve . thpj momaly whereby certaip copipanies in1 ;he taxation scale paid £400 in,;ha^ putj )f an increased prolit of £500. '• : 6. The allowance . of adequate tax-' :ree replacement reserves v- to >ensure he preservation ,,of the Ciapital re-' :ources of industry,- ' which'. were beng bled to death." ' r. ' '