INCOME TAXATION.

Dominion, Volume 6, Issue 1853, 12 September 1913, Page 4

INCOME TAXATION.

THE GRADUATED SCALE. TAXATION OF COMPANIES. In Committee on the Land Tax and Income Tax Bill, Tho Hon. James Allen moved to reduce tho limit to which the rate of Is. in tho pound incomo taxation applied from ±11(300. to £1200, and to add a sub-clauso providing for the graduated scale of one-two-hundredth of a penny in the pound on incomes between £1200 and £1000. In tho class between £1000 and £2-100 tho taxation was increased from Is. to Is. 2d., and the graduated rato reduced from one-two-hundredth to one-four-hundredth of a penny. The result of this, said the Minister, would bo to mako an incomo of £1500 pay Is. lid., instead of, as at present, l.s. Id. £1600 paid Is. '2d., or ono penny more than the present law. Sir Joseph Ward inquired if tlio Minister for Finance had a return showing how tho increase of £40,000 was made up. Tho Hon. J. Allen: It is not £46,000 —not so much. Tho estimate was between £40,000 and £45,000, and of this increase it was estimated that 90 per cent, would be duo to the increase in companies taxation from Is. 2d. to Is. 4d. in the £. There would be very little extra taxation collected from persons, but companies would pay more. Companies with incomes of £1500 to £2000 would pay a little more, but the bulk of tho increaso came from those paying on £2000 to £2400. These latter now paid Is. 4d., instead nf Is. 2d. Dr. A. IC. Newman '(Wellington East) inquired if the Minister would agree to tax the companies on dividends paid, and not on income. This would be in conformity with tho English Jaw, and would meet the objections of the companies. Mr. T. M. .Wilford (Hutt) said that.

the difficulty in this proposal was tho definition of dividend. "There was the danger of "watering stock," which would reduce the payment of taxation. His objection to this Bill was that it did not differentiate between earned and unearned increments. The Hon. .1. Allen claimed that the Kill did make a rough-and-ready distinction between tho earned and unearned increment. It might not bo scientific, but it was effective. Ihere was a good deal of misapprehension about the English method of taxing in-, comes. He was informed that the Home method was not taxation upon dividends. If that method.were ndopted there would bo incessant watering of stock. , , .Mi'. J. B. Hine (Stratford) asked the Minister whether ho was satisfied with tho present assessment of taxation on banks and insurance companies. Mr. A. Ml Myers (Auckland East) said-tliat tho rate of income taxation in New Zealand was tho highest in any country in tho world. Tho Minister said that he did not claim that tho present assessment of taxation on banks was perfect, but that ho did not propose to alter it this year. In reply to a suggestion by -Mr. Myers tho Minister said that ho did not think it would bo a good plan to impose a tax of Is. oil company dividends, and only sixpenco on reserve. Ho would prefer to put a tax of sixpenco on dividends and one shilling on reserve. The Bill was -reported.