TAXATION PROPOSALS.

Manawatu Herald, Volume XXXVIII, Issue 1566, 20 June 1916, Page 3

TAXATION PROPOSALS.

PRESS CRITICISMS,

The following criticisms of the taxation proposals submitted in the Financial Statement appear in our contemporaries : The Wellington Post says “A 45 per cent, tax on war prolits is estimated to produce £2,000,000, and a tax of 5 per cent, on all other incomes £/50,000, Ihe principle of both these taxes will command general approval, and few will lie disposed to rega'rd either of them as excessive in amount. They are more open to criticism from the opposite standpoint. The Finance Minister’s estimate shows thill the aggregate excess protits of our producers and merchants from the war are assessed at about £5,000,000. Why should not the country intercept, half that amount, or even more? In the United Kingdom the tax started at 50 per cent., and was increased in April to 00 per cent. For an allround rate Ihe additional tax of 5 per cent, on all other incomes is less obviously inadequate. As the exemption of £3OO is maintained —a limit at which the British taxpayer is already paying £2O 5s on earned income and £27 on unearned income —our income-tax payers ought, to regard the demand as a mild one.”

The N.Z. Times : —“The taxation proposals are very simple, consistingl mainly of a tax of 45 per cent, on war pi’ofits and a special income tax of 5 per cent, on all other incomes. Of the first, no one can say a word against it, exempt that the amount is not as large as it ought to he. The earners of the many millions of war profits can well aftord to pay more than (he two millions estimated as likely to accrue. They have enjoyed a year’s abnormal profits, millions on millions. They are to be allowed to the end of the year to pay the lax at last laid on them. Yet they are touched for only 45 per cent. If the Budget had fixed it at ninety, they could not have complained, for that would have been but 45 on each of the two years in question. The British tax is sixty for one year. If the Budget had made that the figure these gainers by the war ought to have sung hymns of joy. The Budget is too tender to them. The rest of the income tax payers will accordingly have some right to cry out about their special tax of 5 per cent., on the ground of inequality of sacrifice. To be just let us acknowledge gratefully that there is no tariff squeeze.”

The Dominion says :—“Probably these proposed new taxes will be the most discussed feature of the Budget to-day. The tax on war profits has come and the Government has not minced matters in dealing with it. It is proposed that the State shall conliscate 15 per cent., or nearly one-half, of the war profits earned either from business or directly from primary products. The method of determining what are war profits is to take the average of the profits" realised for Hie three years previous to the war ami treat anything in excess of that amount as war profits. This method is certain to lead to injustice, ami it will also allow many people to escape this particular form of taxation. Probably this in the main is unavoidable, but the Government might well consider the eases of those who have already given voluntarily a hu’ge proportion of their war profits to patriotic funds. It should not he difficult to supply proof in such cases, ami those in this position should certainly not be taxed on what they have already donated to public purposes connected with tin* war. But (bis is not the only increase in taxation proposed. The ordinary income tax on incomes other than those derived from war profits is also to be increased by the charge of 5 per cent, additional on all incomes over £4(10. The Finance Minister estimates a revenue of £2,000,000 from the new tax on war profits and an additional £750,000 from the new lax on ordinary incomes. It may be safely assumed that the revenue of the country will be swelled from these sources by nearly throe millions. That the tax on war profits will he popular goes without saying ; whether it will work out equitably in all eases is quite another matter. On the present occasion we have not the time or the space to examine the position in respect of the Government’s war taxation in detail, but it will he observed that Ministers .still shirk the unpopular step of .spreading any share of the taxation to those with incomes of less than £301) a year, a condition of things which the Minister himself admits exists nowhere else in the world.”

The Otago Daily Times comments on the fact that the sum of £121,183 in excess of last year has been spent on education, bringing the. total up to more than £1,320,000 —a figure which the paper editorially suggests should result in an enquiry being made as to whether the State is refull value i rom what the education of the youth of the Dominion is costing it. Dealing with taxation, the Times states that a special tax of 5 per cent, will be viewed as a fairly heavy additional imposition to place upon ordinary

private incomes, hut, while* n critical examination of this and other taxation proposals must ho deferred, it is sufficient to observe that the limes are exceptional, and it cannot he disputed that they call for a sacrilico in the way of war contribution from every member of the community in proportion to his means. There is one point, however, in this relation upon which the Budget (ouches tentatively, hut in regard to which the Government might well have definitely acted. Incomes under £3OO a year still have exemption from direct taxation. ‘‘There seems to us,” adds the Times, “to be no sufficient reason why the (lovernment, when it proposes to make a special and extraordinary levy on (he income-tax payer, should mil at once have decided upon a reduction of the minimum.” The Journal goes on to (‘(intend that it is not easy to reconcile the statement that the expenditure on public works is to be reduced with the announcement that the House l will be asked, as a precautionary measure, to grant authority to raise £500,1)00 from the Post Office funds, and it is still less easy to reconcile it with the proposal to raise a sum of £2,000,000 for internal expenditure, apart from provision for borrowing £500,000 to provide land for discharged soldiers.