INCOME TAX INCREASES

Hokitika Guardian, 29 November 1928, Page 7

INCOME TAX INCREASES

WHEHE THEY PINCH. SOME EFFECTS OF ACT OF 1927. AUCKLAND, 'Nov. 27. “Why are we 'being taxed more heavily oil last year’s income?” is a question which is being asked by a number of business and professional men in Auckland whose incomes ranged approximately from £4.30 to £730 for the year which ended on March .‘Jlst. last. Not all the demands have reached their destinations yet. They are apparently issued in alphabetical order. In those case where they have arrived, however, there are signs that the financial shoe is pinching. “You have put your finger on one of the most ingenious examples of taxation adjustments that we have seen in this country,’ said a professional man who is intimately concerned with the estimating of incomes, when approached by a reporter. “If you look up Hansard,’’ he added, “you will .see that when the 1927 amendment of the huv relating to the £3OO exemption was introduced the Hon W. Downie Stewart said it was intended to adjust anomalies. Examine the provisions of the amendment and yotl will see that adjustment of anomalies means that persons who might have expected to lienefit are in a worse position than they were before. This has been brought about by reducing exemptions. Tt was pointed out that as regards incomes of £452 to £748, practically the only ones intended to be affected by the new legislation, all persons have had their £3OO exemptions reduced. In some instances the reductions have been substantial, '[’lie first reduction In exemption is one of £1 in respect of an income of £4523, and thereafter the exemption is progressively reduced by £1 for every additional £2 of income, until at £OOO the exemption is reduce' to £225.” “II will be seen,” said the actuary, “that those whose incomes are not less than £452 and not more than £OOO have sustained a reduction in exemption. In the case of an income of £OOO the reduction amounts to £75. The effect, of course, is to increase the amount or which income tax is payable. The 1922 Act made reductions in exemption in respect of incomes over £6OO and up to £750, but the only instances in which the exemptions remains the same are those of incomes of £749 and £750. namely, exemptions of £149 and £l5O respectively. On incomes of £751 to £9OO the reduction of exemption works out the same way under both Acts, which indicates that the 1927 Act did not aim, at affecting exemption as regards the higher incomes. The greatest reduction was in respect to incomes of £6OO. “In regard to the rate of taxation, the alterations under the 1927 Act commence at incomes of £320 (7 2-15 d in the £ under the 1926 Act and 7 l-15d in the £ under the 1927 Act) and extend to incomes of £9OO (lid in 1926 and Is Id in 1927). Taking incomes of £6OO, the amount payable under the 1926 Act on an exemption of £3OO and at the rate of 7d in the £ on £3OO was £8 15s. The amount payable under the 1927 Act. with exemption of £225 and at the rate of 7? t d in the £on £375, is £l2 2s sd. Increase in respect of income on this basis is thus seen to be fairlv considerable.”