Checking Up on Incomes

Sun (Auckland), Volume II, Issue 369, 1 June 1928, Page 8

Checking Up on Incomes

National Wealth Pays Tribute Over Three Millions in Tax EIGHTY THOUSAND worthy citizens have been doing some hard thinking in the past few days. Completing a process that is as irksome as it is unavoidable, they have (or should have) by to-day, June 1, ioiwarded income returns to the Commissioner of Taxes. The next move is the Commissioner’s. Exempting perhaps 40 per cent, of the 80,000, he proceeds to exa<;t some three and a-half millions in tribute from the remainder.

JUNE 1 Is a very big day with the Taxation Department. On the returns submitted, according to law, on that day, are based the demands issued several months later to confound the optimist and plunge the pessimist into still deeper gloom. To the taxpayer, no processes of doom, Armageddon, or earthly destruction loom more potent or inexorable than the processes set in motion by the Taxation Department. The tabulation of the returns is a huge task, for which the ingenious Powers’ tabulating plant of the Census and Statistics Office is employed. A card for each return is punched in the tax department, and the cards are then sent on to the Census and Statistics Office. If he can spare the time to note such formalities, the taxpayer may be pleased to learn that the cards bear no names. At this stage of the game the man who pays is anonymous. From the elaborate tabulation and analysis of the returns are determined

the exemptions and assessments. In 1926-27, 84,640 returns were sent in and of this number roughly 43 per cent, was eliminated, leaving 48,899 to pay tax. FIFTY POUNDS PER CHILD Last year the amount of income tax paid was £3,422,216, which was nearly £200,000 in excess of the assessed tax, the margin being composed mainly of arrears and penalties incurred through late payment. Income tax Is payable on the full

incomes of registered companies, and on private incomes above £3OO a year. Of the last yearly quota of returns, 22,000 were from individuals or companies earning or receiving less than £3OO per year, and the former were automatically freed from the obligation of paying tax. There were 23,400 returns of those enjoying—if the term be permissible—incomes ranging from £3OO to £4OO a year, but of this large army only 42 per cent was actually required to pay any tax. Moreover, the average sum those in this class were required to pay amounted to only sevenpence in the £ of the taxable balance. Hence, though their numbers were great, they contributed relatively little to the national coffers. Nearly 13,000 were in the next class, receiving from £4OO to £SOO a year, and 75 per cent, of them were required to pay tax. In the next grade, the £SOO to £6OO class, the percentage is still higher, and in the next class. £6OO to £7OO. exemptions become practically negligible; while further up the scale they diminish _ to vanishing point. The exemptions granted cover a concession of 5 per cent, on capital value of land whence income is derived, deductions of £SO from assessable income for each child on grandchild, dependent on the taxpayer (whose widowed mother may be similarly provided for); and exemptions allowed on life insurance premiums, superannuation funds, and contributions to friendly societies. The total amount of exemption allowed for children in 1926-27 was £2,502,996, and for life insurance premiums and corresponding contributions £831,082. LEVY ON WEALTH On the larger incomes, from £IO,OOO upward, the amount of tax payable may be as much as 4s 4d a £ of the taxable balance. This is the figure, at any rate, for those with incomes of £IOO,OOO or more, but there are only 16 such Incomes, all representing the harvests of powerful companies. Individual incomes in New Zealand reach the £IO,OOO mark only in rare cases. Statistics show, however, that the highest taxable amounts occur in the earnings of industrial and mining concerns. Among New Zealand’s highly-salaried men are found nine executives paid between £5,000 and £6,000 a year, but few personal salaries rise beyond the latter figure. Professional men in business on their own account, including lawyers, doctors, and architects, command some big incomes, a favoured half-dozen going as high as £6,000 or £9,000. Rural incomes, of course, are now largely taxable under the land taxation scheme. But the pronounced feature in New Zealand at present is the gradual drift of wealth from the country to the towns, the formation of a business aristocracy challenging the ancient hierarchy of broad acres and wool. Thus to-day it Is the city companies and city businesses that carry a widening share of the burden.