The Guardian And Evening Star, with which is incorporated the West Coast Times. FRIDAY, AUGUST 7, 1931. INCOME TAXES.

Hokitika Guardian, 7 August 1931, Page 4

The Guardian And Evening Star, with which is incorporated the West Coast Times. FRIDAY, AUGUST 7, 1931. INCOME TAXES.

The proposals of the Government in the Budget in connection with an increase in income tax include the reduction from £3OO to £260 in the limit of total exemption from taxation and the change that is contemplated in the scale of graduation of partial exemption on salaries between £260 and £BOO, at which latter figure the exemption ceases will, together with the increase in the surtax from 10 per cent, to 30 per cent., have the effect that the persons in receipt of moderate income will have the amount of their tax raised in a degree that is much more severe proportionately than will be the experience of the persons with the higher incomes. The increase m the amount of the tax that will be payable on incomes above £9OO will be 18 per cent, On incomes ® below £9OO the proportionate' increase will be progressively greator from the higher to the lower income and will be greatest on the lowest taxable amount. At first sight, comments the Otago Times, it may seem to be an extraordinary scheme of taxation under which the percentage of increase on the tax paid by the recipients of small and moderate salaries is .considerably higher than the percentage of increase in the taxation levied on the larger salaries. An explanation of it may, however, be hazarded. The Gov-

ernment has to raise as much money as it can through a revision of the in-come-tax rates. It aims at obtaining £730,000 by these means. It could, however, have no reasonable expectation of collecting this sum if it confined 1 its attention to the larger incomes. Its only hope of securing the estimated yield lies in gathering as much as it can from the majority of the taxpayers, who belong to the category in receipt of salaries between. £3OO and £6OO. The latest available returns show that in 1929-30 .the number of taxpayers with salaries between £3OO and £4OO was 12,527, and that, doubtless owing to the operation' of the exemptions in respect of dependens and of life insurance payments, nearly 20,000 other persons who fell in th 4 salary category wholly escaped' income taxation. The taxpayers in receipt of salaries between £4OO and £SOO numbered 11,953, and there were , neatly 4000 .with, salaries .on. this level who taxation. These are the two largest classes of of payers of income tax, and next to them comes the class which comprises the recipients of salaries between £SOO and £6OO, It may be surmised that the reduction of the exemption limit will bring into existence a new class of taxpayers, to the number of several thousands, consisting of the persons with salaries between £3OO and £6OO, as well as of persons with salaries between £260 and £3OO, who have escaped taxation in the past. The fact that the persons that are included in this salary category constitute a large proportion of the payers of income tax must be assumed to have influenced Air Forbes in his revision of the taxation scale. The explanation is not likely to be regarded as very satisfactory by those who may feel that a disproportionately heavy sacrifice is being demanded of them. Mr Forbes’s aim is, however, to secure revenue, as far as possible, by exacting it from the most numerous classes in the community. *