THE INCOME TAX.

Evening Star, Issue 19658, 10 September 1927, Page 6

THE INCOME TAX.

The House of Representatives lias passed tlxo Land and Incom Taxation Bills. Despite all the criticism that has been levelled against them, it would be a difficult task to prove that the alterations are not an improvement. If one consults the official, tables published today showing the taxes paid in 1914, on the last payment of tax, and on the next one it is seen that on the last collection those with incomes between £l,lOO and £1,600 actually paid less in income tax than they would have done in 1914, whereas those both below them and above them in the scale of incomes paid greater taxes than in 1914. Parliament has now rectified this, and it has not only brought up their taxation with a considerable jump, but has raised also the taxation of all those with taxable incomes of over £3OO. The tables make this fairly plain, but in studying them one has to remember that the taxable incomes between £3OO and £9OO will now bo arrived at by a different computation this year from what they were last year; for the process of reduction of the maximum deduction of £3OO income now begins at £450 instead of £6OO, and is not on the £ for £ basis all the way through to its disappearance at £9OO. Unless this is borne, in mind one might be tempted from the Government’s own tables to dispute tlio very weighty argument used by Mr Stewart in a prior stage of the Bill’s passage through Parliament. He declared that there was a sudden jump between incomes of £6OO and £700; that the former (taxable on £3OO at 7d) paid £7 17s 6d, while the latter (taxable on £SOO at Sid) paid £ls 12s 6d. Reference to the table would not disclose this undoubted anomaly at first sight, but it undoubtedly existed, and has just ao undoubtedly been rectified. As Mr Stewart stated in his Budget, the effect of income tax increases during the war and various subsequent decreases since 1921 has been to upset seriously the fairness of the graduation, and the resulting anomalies were pointed out by the Tax Conlmission-of 1924. It was obvious that before any start could be made towards reducing taxation the scale of income tax should he restored to a,proper graduation, otherwise the schedule would become still more full

: of anomalies. The Minister’s Budget passage under this head concludes: “ I hope this year to effect some improvement in the graduation with a view to remedying the anomalies mentioned, so that when a reduction is feasible it can be made on an equitable and scientific basis.” It is quite nlain that Cabinet did not consider a reduction feasible j this year. On the contrary, there has been an increase, estimated to produce about £150,000 to £170,000 more revenue, on a total collection of nearly

three and a-half millions. Towards this increase all classes of income taxpayers except, roughly, those in receipt of less than £600; a year will contribute, and it is not’ untrue to say that the relatively slight additional burden will be distributed in proportion to ability to stand it. Further, both the Minister of'Finance and the Prime Minister definitely promised yesterday ’-it the increase in direct taxation is to be set off by a decrease in indirect taxation. Mr Stewart’s words were defimtelv that whatever increase took place m income tax would be taken off as a result of the revision of tlio .Customs tariff. ‘This statement gives additional interest and curiosity to the promised appearance of the new tariff next week. Tt looks as though the fanner were about to score. Ho does not pay income tax, his direct taxation being in the form of land tax. The increases in income tax thus leave his direct taxation unincreased, and in view of his strong Freetrado agitation and the fact that townspeople call this a Farmers’ Government it is highly improbable that remission of duties.on many farmers’ requisites will be refused by the Government.