INCOME TAX UP

Evening Post, Volume CXII, Issue 85, 7 October 1931, Page 4

INCOME TAX UP

4D IN THE £ OVEE £500

MORE FROM UNEARNED INCOME

"These proposals outlined," said the Minister, left atout £470,000 to be ■provided for .by additional taxation over and above the amount proposed in the main Budget. The first question.was as to where this could be imposed with the least hardship. "As regards Customs taxation," he said, the tariff rates are already so high that the law of dimriishing returns is operating over many of the items.- I propose, however, to move a resolution tonight with regard to two classes of imports which I think will provide about £240,000 towards the amount required. ' . ' '■'For the rest I am driven to. review the'position and the possibilities of .further direct taxation through the income tax. ;.■■ •■ '■ •■■.,''.' ."■ ,' ' ■ Income tax is always less palatable to the taxpayer than indirect' taxation; but in the present emergency we have no option. The payers of income tax will view with strong disfavour further burdens being mi,- , posed upWthein. 1 take it, however, • that these, taxpayers 'would prefer to ■'. shoulder further'burdens rather than "■..,see'-.'reductions made in the old-ago ; pbnsioiis, soldiers' pensions, and pen- ■ sibns- for .the blind.' * They would • ■'. equally, resent any suggestion that .v the .State should, default i,n its interest payments. A- reduction'in pensions '■■': may.-at. a'py -time becdme an imperative" necessity if tho. ; wQi'Jd's' 'price levels remain-low, but for purposes of my; .present computations I have , laid this.on.one.. side. , ~.. .. r companies expluded. ;/. ■•■: "Dealing now with tho : income tax, it is'weli known-that the company' tax in New Zealand-is the-heaviest in the British Empire, if not in the. world, while individual inco'itie tais. is .the' lowest in {he" 'British Empire..; I do: not therefore consider-it expedient or just to add any thing' more'- -to.-, the company tax than : was: imposed; by the - main Budget ;;:MoTe: particularly; is "this -the case- in view of the.fact that it 'large proportion of-.the :companies engaged in'business in New Zealand are engaged in- financing ot: .assisting the primary producer; and any further tax burdens imposed upon companies is liable : to reflect in a restriction of advances to farmers or withdrawal of other forms o*: assistance. I therefore' exclucb the frorii directftjixation.^ ; • { "■■ ■'.•■■ viewing' the pipspect pfiurther Sreypnue froni..direct taxation. . ...'.', ■ ■ ".

INDIVIDUAI. INCOME-TAX /PAYER. : --.-■ "Haying already-..stated thgt'the' imposition 'of further taxation on. companies . is' not justifiable,; I: now come to the position of, the individual taxpayer. A:t present his contribution by way of income-tax is the lowest in the Empire, by reason of the low mini-mum-rate at which our Act starts and liberal exemptions he enjoys. lam not forgetting the fact that the main Budget increased his surtax from 10 per cent, to 30 per icent., but I have*point-

Ed out that the receier of gilt-edged income is called upon in .these troubled, times !to bear his share of the burden. He is more concerned,than anyone olso to see that the State remains solvent. European experience shows that in a general breakdown' he suffers irretriev : ably more than anyone else. In imposing any fresh burden, it is pointed out that he should bear a share commensurate "with the risks he has at stake. With these aims in view, I propose in order to secure the measure of assistance which it is considered indispensable that the in-come-tax should yield :— (1) To impose a special emergency tax on unearned income of individuals eaual- to one-third of the in-come-tax payable on such .unearned income, and to eliminate the 10 per cent, deduction, at present allowed on earned incomes up to £2000. (2) To include' in the assessments (but only for the purpose of fixing the rate and the general exemption) all tax-free income and income taxed at the source, and to remove the present discrimination on income derived from certain local-body and company debentures. (3) To impose a special flat-rate tax of 4d in the £1 on incomes of individual", sfter allowing a general exemption of £500. "It ris estimated that the effect oi' these alterations with 'the abolition of the graduated land-tax will be to increase the net yield on these items of taxation by about £230,000.