TAXATION.

Hokitika Guardian, 7 October 1924, Page 4

TAXATION.

I' 1 ACTS TO BE FACED. PA VINO .MOP K AND GETTING .MOPE, nil.

Another objection will'd against tln> : removal of the income tax from comr panics to individuals is that it would necessitate a largo increase in the taxation of people of small and moderate means. This is a much more plausible objection than the one which contends that the transfer would make it impossible for individuals engaged in trade and commerce to compete successfully against companies engaged in the same line of business. The latter has been shown to he entirely fallacious. But it is true that if tin: companies were relieved of the excessive portion of the tax they now pay—• and mainly pass on to the public—it would he necessary to recover the lost

revenue from some other source. That fact must be admitted quite frankly. But though the rates on taxable incomes would have to be increased there can he no doubt that the reduction in the prices of commodities would more than compensate the taxpayers for the additional charge. They would know exactly Where they stood in the matter of taxation, and they would not he subject to the operation of the passing on process from which they are now suffering. Unfortunately the Taxation Department was unable to supply the recent Royal Commission with any figures that would have enabled it to estimate at all confidently what additional burden it would he uooessnrv to impose upon individual taxpayers if the companies were charged merely a llat rate upon their undivided profits and the rest of the tax enllectod from the individual shareholders according to their graduation. It is the absence of reliable information upon this and other points that has prevented some important nuestions raised by the Commission’s report being discussed during tin- present session of Parliament. There can he no reasonable doubt, however. Unit, with the principle of individual taxation established, the adoption of some of the Commission’s supplementary recommendations, such as the abolition of inequitable exemptions, the re-arrangement of the methods of assessemont and the taxation of State and municipal trading undertakings, would very materially assist in placing the whole system, upon a basis that would meet with the general approval of the community. who pays? fn this connection it will ho interesting to examine a table attached to the report of the 'Commission presented'' to Parliament, showing (1) classes paying personal income tax; \'2) percentage of each class’s income to total income mid i.:t) percentage of each class’s payment to total payment:—

These figure-, il may he well to cm pliusise, refer-- to personii! im epp - net to epinpaiiv lie nines. Il the ipt-npp-:: from eompatiie.s, now paid, out Ip individuals alter the deduction id income tax, were transferred to the individual list, they would add materially to the number of taxpayers and at the’same time remove many of them, from the class in which they now appear to a higher one; blit probably Lite numbers in each class, relative!.!, would remain the same. The striking feature of the figures is their indication of the very small proportion of the total assembled income of the country in 'the hands of those with large incomes and the very large proportion in the hands of those with small income.s. It is tolerably safe to say that in no other country in the world is wealth so widely diffused as it is in New Zealand. VAI.UK FOR TIIKIR MONEV. If income lax were collected in this country on the individual system it would have to come largely Irom where the income lies, that is, irom those with moderate incomes; hut this does not mean that, the recipients of these moderate incomes would be placed in a worse position than the one they occupy under the existing system. They would he saved, as already explained, from the demands made upon them by the passing on process, which year in and year out, costs them substantially more than would any necessary re-adujutmeiil of the rates of income tax. It must he remembered, too, that moderate individual incomes are taxed at a lower rate in New Zealand than they are in any other part of the Empire. Here there is space only for a lew lilies n! figures by way of illustration. A taxpayer with an income of 9100 nays in Now Zealand, 93 12s; in New South Wales, gl I (is 7d; in Victoria, 99 lOs Id; ill Queensland, 913 Ids lOd ; in South Australia, .912 Os f).jd and in Groat Britain, 917 11s .‘id. A taxpayer with an income of .9000 nays in New Zen- 1 land, CIO Ids (id; in New South Wales- J .931 19s 2d; in Victoria, L‘27 9s 2d; in ( Queensland, .930 17s lid; in South Australia, 920 Ids Sd and in Great | Britain, 91.7 os Od. A taxpayer with < an income of £9OO pays in New Zea- < land, Ml 10s; in New South Wales, 1 .970 Ui 2d; in Victoria, 917 7s Sd ; in Queensland, ,907 -Is (id ; in South AusIndia, 9-1(5 Os (id and in Great Britain, ( 9S(i Is ,‘Sd. A taxpayer with an income of 91,000 in New Zealand pays < .971; in New South A\ ales, 983 17s- f lid; in Victoria, 901 ISs od; in ( Queensland, 9103 3s od; in South t Australia, 907 17s 7d and in Great Britain £l2O 11s 3d. In all these countries deductions from assessed incomes are allowed on account of children, hut the deductions in New Zealand in the lower graduations are much larger than those in any of the other countries. Expressed in nnothei way, these figures menu that in New South Wales those with moderate incomes pay 90 per cent more than they do in New Zealand, in Victoria 71 per , cent, more, in Queensland 131 per cent /

more, in South Australia (11 per cent more and in Great Britain IS2 per cent more. THE ULTIMATE GOAL.

Again it seems necessary to repeat that the increase of the income tax on these moderate -incomes, which would be inevitable in the event of the individual system being adopted in this country, so far from prejudicing the position of their recipients would in the end he an advantage to them in many respects. The relief given to the companies would make an appreciable difference in the cost of living by substantially reducing the charges for goods and services generally supplied by companies. The lightening of the

companies’ burdens would stimulate enterprise and industry in many directions, and thus would hasten a return of prosperity from which none would benefit more quickly nor more substantially than those with small and moderate incomes. .Moreover, it has to he horn in mind that companies are chiefly owned by persons with small and moderate incomes, and that they arc the very people who arc being penalised. both financially and economically, by the present inequitable distribution of the country’s burdens. It lias been demonstrated beyond all possible doubt that an investment in company shares under the present system of taxation is much more remunerative to a large shareholder than to a small one. The adoption of the individual system would place them on an equal footing. That fs the goal—equality of sacrifice and equality of opportunity—at which every just system of taxation would aim.

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