Taxation’s Yoke

Sun (Auckland), Volume II, Issue 601, 1 March 1929, Page 8

Taxation’s Yoke

Burden Shows Little Decrease

BY this evening approximately 52,000 people in New Zealand will have paid their income-tax, amounting to nearly .£3,500,000. Few of them ask why they have to pay it, or how it is assessed; most of them simply obey the law and pay. In other British countries there is a tendency to ease the method of collection, but New Zealand's steadily rising yield of taxation is gathered on the same rigid formula as in the happy days before the war.

jyTISTAKES rarely occur in the taxation accounts, and when the annual demand is made upon the middle-salaried taxpayer, his faith in the Income Tax Department induces him to take the official word for it that the Bill is correct. It is too much for his busy mind to investigate the intricate process in which the man who receives £1,500 a year is charged 7d in the £1 up to £3OO and l-100th of a penny on every £1 above £3OO, while his co-worker on the £3OO a year mark has a smaller account assessed on a lower basis.

He simply meets his obligations when the last day of grace dawns, and sighs because yet another hill is out of the way. The war left to New Zealand an unwelcome taxation legacy, and incomes were obliged to contribute their share directly toward the general burden. At the beginning of 1920 incomes provided 45 per cent, of the State taxation of the Dominion, and Customs duties, mainly through a moderate policy of importations at the time, gave only 30 per cent. The aggregate collections by the State have increased by under £1,000,000, but the manner of their distribution has altered appreciably. Incomes now hear just under 20 per cent, of the total State tax of nearly £18,000,000, and Customs duties contribute 52 per cent.

The main factors contributing to this remarkable alteration in percentages are the reduced income of the people generally compared with the boom period, and the removal in 1923 from the farmers of their income-tax obligations. This concession to the

farmers was made at a time of depression, however, and affected in-come-tax .revenue only slightly. This cannot be interpreted to mean that the people on the middle salaries —who after all comprise the bulk of the New Zealand ratepayers—are paying less. Actually they are paying more, and are swelling the State revenue in other ways through indirect channels. Expanding population and price inflation, as well as other abnormal conditions of the war, have contributed toward trebling the taxation between 1913 and 1920, but the increase was too rapid to be accounted for solely by these more obvious causes, which, in fact, do not in themselves change the real burden of taxation. BURDEN OF THE WAR But eliminating the war and taking into account the country's insatiable demand for increased public services, regardless of the cost, it is discovered that while production has raced ahead, it has been steadily headed off by a galloping annual taxation bill. After allowing, at a conservative estimate, something over £5,000,000 annually for war charges, including interest, sinking fund and pensions, one finds that the State is now imposing a heavier burden upon the taxable people than before the war, for the rise in population and prices are hardly keeping pace with the expansion in taxation. War conditions were used in New Zealand as an opportunity of imposing new taxes and increasing old ones, despite the fact that the whole direct cost to the country of the war was met by borrowing and in no manner by increased taxation. The heavy indirect war charges which necessarily must be collected now, are not shown to have stimulated greater economy in other departments of State. THREE WEEKS’ GRACE

Of the 52,000 people who will have —or should have —paid their tax by this evening, 26.64 S are in receipt of incomes under £SOO, and 25,283 draw annual salaries above that amount. Many taxpayers do not appreciate the fact that they have 21 days of grace after the date mentioned on their taxation demand. This, in the light of comparison with other countries, is not exceptional. In New South Wales 120,000 people have just received demands for payment of income tax, which is estimated to produce for the State £7,150,000. The period of grace has been extended by legislation to 30 days, and it is proposed that this will be further widened to 60 days before the end of the current financial year.

England has gone one degree further in lifting the heavy load, and has provided for payment in two instalments. This is warranted by the comparative immensity of the English taxation burden, which includes in some cases a multiplicity of demands incurred by the stress of war, and post-war dislocation. In New Zealand there seems no ground for the suggestion, facetiously made, that arrangements will be made eventually for tax payments on the complete instalment plan.