LAND AND INCOME TAX.

Taranaki Daily News, 6 March 1917, Page 2

LAND AND INCOME TAX.

A\- INSTRUCTIVE EXPOSITION. BY TI-IE MEMBER TOR EGMOXT. There was a good attendance at the Elthani Town Hall on Friday evening, when Mr. C. A. Wilkinson, M.l'., gave an address 011 "Land an 1 Income Tax Assessment." The meeting was held under the auspices of the liieal Chamber of Commerce. Mr. ,1. L. Weir presided. In opening the proceedings, the chairman said that that meeting was called as it was fully realised by all that the making up of taxation returns was a dillicult matter and one very little understood *oy the average man. As a matter of fact it would, he declared, take a 'Philadelphia lawyer to understand it, and some very unfair taxation often resulted. Mr. C. A. Wilkinson, however, had kindly consented to endeavor to explain some of its intricacies, and at the conclusion questions would he welcomed. Their wish was to assist people to comply-with the law and to avoid any unjust inequalities. - Mr. Wilkinson, in opening, said he did not wish to pose as an authority on the Finance Act, but he would endeavor to throw as much light upon it as possible. On the principle ol' any tax, ho said, it was impossible for men to agree, but taxation had to be imposed and endeavors were made to do so in the fairest manner. The income tax originated in England. In that country it had been as low as 2d, and was now Ss Gd. The late Mr. John Ballance introduced it into New Zealand in the place of the property tax. In this country the maximum has been as low as Is 4d, but had now reached 3s Sd. What the maximum may yet be it would lie hard to say. In the first place, the smallness of the amount prevented people from worrying about it, but now it was a different matter. In 1913-914 only 14,"277 paid income-tax", and the total amount came to only £354,271. In the following year, strange to say, ffjwer people paid and the amount collected was less than the previous year, there being 13,807 taxpayers and the amount) £540,318, while in 1015-1G he estimated the Finance Minister would receive through it about four millions sterling, or about eght times as much as in JOl4. The latter estimate included the excess profits tax. They heard a lot of talk about conscription of wealth. In his opinion, this conscription of incomes w-as conscription of wealth. If they conscripted capital it would be confiscation. After referring to the evil effects that were bound to follow the conscription pf wealth, Mr.' Wilkinson pointed out that the income tax was always a year behind. They paid in .March what was due the previous year. The tax was levied year by year. The i.''iuance Bill contained details of the lax. This being an annual liill, with new provisions, always provided new powers to aliow the taxing office to rope in those who had previously evaded the tax'. He therefore recommended farmers and others to rende; their returns in a strictly accurate manner. In 1015 the tax was 2s Sd. This was increased in IOLG by,, 5 per cent. 011 the taxable balance of income, which made it 3s Bd, but was later reduced to per qeizt. on incomes under £!>00, as it was considered unfair that a man with a comparatively small income should pay as much as the man with a big one. It was then decided to also impose an excess war profits tax of 0s in the £. The income was not levied 011 an income under £'3oo, but in the 1015 Budget, however, a very significant paragraph appeared, which stated that in the event of the stress of the war making it necessary this limit might have to be reduced, and people who received a modest wage be called upon to contribute. In England it was levied on all incomes over £l3O. In New Zealand several exemptions were made; up to £SO was allowed the man who insured his life, and a further £25 for each of live children, provided the income did not exceed £iH25. Referring to the excess profits tax, Mr. Wilkinson pointed out that 110 excess profit) tax was levied unless more than V/ a per cent, net was earned on actual capital used in the production of income, in addition to which a further allowance was made, which could bo, at the Commissioner's discretion, up to £OOO.. This allowance was mostly determined by the salary that would have to be paid "to a manager running the business. This was, however, only one of the taxpayer's options, and was known "Option IJ." In addition, the taxpayer had further options known as A, B, and €., these providing that no excess profit tax should be paid when the net income earned during 1912-13-14 was as great as the income for 1910. The speaker illustrated the position with the suppositious case of a man with an income of £1550 per aurtum who could get exemptions for various expenses, say £7OO and on £350 for personal and insurance exemption, leaving £0)0 to be taxed. But if his profits in the years 1012-13-14 were only £4OO, then that would leave only £IOO to be taxed as excess profits, and on which he would have to. pay 4o per cent, or £45. ' There having been no income tax levied on farmers in the years 1912-13-14 the excess profits were difficult to estimate, and this might be dealt with under what was known as option I) of that Act. An illustration of the working of the T/ s r,cr cent, exemption on interest on capital was then given. All imaginary farmer was supposed to hold property 'of which the Government valuation was £IO,OOO. This was the only valuation recognised by the Department, and. which might mean that the property was really vorth much more. The man's gross proPis were put at £1550. On this sum he received exemption ofv'/i; per cent, on the £10,00'), or £750, together with personal exemption £301), and working expenses £7OO. These exemptions would amount to £1750, or £2OO more than his actual income, and he therefore escaped taxation. On tho same income with a capital of only £SOOO, a man would get exemption of £1375 on'y. and would have to pay excess profits' tax or, £175, or, at 9s in the £, £7S iss. The exemptions from income tux were granted farmers on 5 per cent, on their actual interest in their property, and expenses for all labor employed (and. actually paid for), all manures, seeds, liorso feed, -ploughing, painting, renewals, fencing, plant, interest 011 mortgage, rates, taxes, fire insurance and, personal exemption of say, £3OO. Mr. Wilkinson emphasised the necessity for filling in all returns asked for by the Department, and in addition the very great necessity for making and preserving proper duplicates. - With regard to the assessment papers, he pointed out that if the -figures given on them were incorrect the person concerned should immediately forward any objection to the Commissioner. Not paying done so the figures would be I

taken as comet, as alterations were difficult to obtain at a later date, the taxpayer being held responsible. Heavy penalties could also be exacted for nonpayment. Tlic income tax was also Jevicd on profits, and if properly made out no one Jnul really any right to object. The more a man made the more lie should bp willing to pav» He thought one mistake had been made by the Government and that' was the repeal of the mortgage tax, which was in his opinion a present made to men who could well all'ord to do without it, although on the other hand they might be hit even more hardly under some portions of the income tax. In conclusion .Mr Wilkinson pointed out that in dealing with financial matters a member of Parliament had practically 110 power at all. If unfavourable criticism was upheld and carried, and the policy of tl.(' Government disagreed with, they would probably resign. With a National Government in power private members were 1 a worse position than ever. He con;., ulated the Chamber of Commerce 011 e.i.liiig a meeting to discuss this very interesting question. Mr Wilkinson resumed his seat amidst a'pplause. Mr Weir then referred to the making up of the income return, which he said had been ignored by many people. He pointed out how necessary it was that this duty should be done, by everyone in tiieir own interests. He proceeded to outline the information necessary to be given, and the proper manner of giving 1 it and suggested that in the case of farmers having 110 records from which to make up a standard income return, that they apply to their dairy factory and forward their payments, in the return. He Avas not sure that the department would accept this, but it was, lie said, worth trying. Concluding, the chairman said if it was found to be r general wish they would call another meeting to deal with the matter. He warned them to "be wary of accepting the 74 per cent on capital value. Mr G.D. Gow detailed some cases of injustice under the working of the Act. as also did Mr D.L.A. Astbury. Mr Wilkinson said these were bound to occur at first, but he thought everyone would be caught in the end. Mr T. B. Cruhp pointed out that the dishonest man, whom many were afraid was escaping, would also be caught very badly in the end. lie was surprised that so many people failed to fill in the various necessary forms, some from carelessness, and others because thej had to procure the forms for themselves, being of opinion the department should forward them. They were going to get into a lot of trouble before the matter was concluded. In answer to a question the chairman said 110 money paid to a man's wife could be included by him in his return as payment for labour. Mr J. Swindleliurst asked ir payments to children for work done could be included. The ' chairman: Yes. To sons or daughters if the money is actually paid, i In answer to a further question the chairman replied that no exemption was given soldiers on profits made, and no exemption could be given for wages paid a soldier's wife, though she managed the farm during the man's absence at the front. • The meeting concluded with votes 01 thanks to Mr. Wilkinson, the chairman, and the Chamber of Commerce.—Argus.