RE THE FINANCE BILL

Dominion, Volume 9, Issue 2810, 30 June 1916, Page 6

RE THE FINANCE BILL

Sir,—l observe that Mr. Wilford, M.P., has given notice of his intention to ask thi; Minister of Finance if when frMiiing tho Finance Bill ho will differentiate between earned and unearned income. Mr. Wilford is evidently in favour of'the principle of the inequitablo mortgage tax 'Leinjr perpetuated in the income tax proposals in the- new Finance Hill. That principlo is that what is called unearned income shall pay a' higher tax than oarned income. I will try. to show by

means of example how unjust and con-* trary to public policy that principle is. A and B are each earning .£IOOO a yeur. At tho end of, say, 25 years, by juean» of rigid economy and judicious investment, A has put by a sum which vill bring him in £1000 a year. B, who enjoys the good things of life, has denied himself nothing, and has put nothing Ly. B, tho spendthrift, continues m business. A decides to retire, or, it may be, retires owing to ill-health. Ais then cslled on to pay a higher tax than B on a similar income, because A's income is classified as unearned. Is it fair, equitable, or according to public policy that A should Le penalised in such a way? On the contrary, such a principle is not only inequitable, but is a direct discouragement of that thrift and economy which it is so necessary to inculcate aud encourage at tho present time. Mr. Wilford is, no doubt, hitting ot the man who has inherited wealth, and I am in sympathy with him there. That form of wealth should be taxed by means of death duties before :t reaches tho hands of' the inheritor on a graduated scale, according to the amount involved. 1 understand this is alrealy well provided for in this Dominion.

I think Sir Joseph Ward is to be congratulated in having provided in hm Financial Bill for the abolition of the mortgage tax. Sir Joseph is jn acknowledged financial expert, and I have faith that he will provide for an income tax which will tax the taxpayer atcoraing to his ability to pay, and vhich will not penalise thrift and economy in the way the mortgage tax has done. 1 hopo that his scheme will contain the following provisions, and that he will have the assistance of Mr. Wilford's undoubted talents in carrying those provisions into effect, namely: 1. No differentiation in taxation with regard to the source of income. 2. The same exemption :n respect of alt incomes. 3. Graduated scale of taxation on the amount of jncome involved. Sir Joseph Ward's proposuls will do away with at least one anomaly which I will also 6how by way of example. A, and B each have .£OOOO, and their only source of income is from these rmonnts. A lends his money, secured by bond, and derives therefrom an income of .£3OO a year. This is liable to income tax, bnt as ho gets an exemption of .£3OO he pays no tax. B lends his money on mortgage aud derives therefrom an income of JE3OO a year. This is liable to mortgage tax without any exemption, and he pays mortgage tar at Id. in tho £ on the capital amounting to .225. —I am, etc., CITIZEN. Hastings, June 26, 1916.