The Daily News. SATURDAY, OCTOBER 9, 1920. TAXATION PATCHWORK.

Taranaki Daily News, 9 October 1920, Page 4

The Daily News. SATURDAY, OCTOBER 9, 1920. TAXATION PATCHWORK.

"The aim of the Bill is not to raise additional revenue, though it may effect something in that direction, but to remove anomalies in the present system, and levy taxation more in accordance with the principle ' of ability to pay." Thus Mr. Massey spoke when moving the second reading of the Land and Income Tax Bill on Tuesday. The adoption of the principle of "ability to pay" Would certainly be welcomed as sound economic policy, and it is on this test that the taxation proposals should be judged. Unfortunately the Premier made a bad start by proposing to tax local bodies' debentures, a matter on which comment has already been made in this column. The imposition of a thirty per cent, increase in the taxation of idle land is a move in the right direction. All the land in the Dominion should be made productive as far as possible, including that held by Natives, and if the Premier had proposed a fifty per cent, increase it would not have been too much. Moreover, the Commission should not be the sole arbiter as to whether land could be improved. The granting of a ten per cent exemption on earned income is sound in theory, but .it is doubtful whether it will work out equitably in practice in all eases. If the real merits on this matter are considered, the man who by his own strenuous efforts earns a good income should deserve a twenty per cent, exemption, but the border line between the earned and unearned income can be made somewhat elastic. The proposal to treat two or more companies, with practically the same shareholders, as one company is a good business move that should put an end to the evasions now practised by means of dividing up companies. Some disappointment will be felt, at the lack of a bold policy iu connection with the land tax. The small reductions made up to £SOOO are not wnrlh consideration, while the increases about that value will not have the effect desired of "bursting up" the big estates of suitable land for settlement. Alterations are to be made to the income tax scale, which are already fairly stiff. Mr. Massey shows how well off in this re&peet is the New Zealander as compared with the payer of income tax in Britain. It remains to he seen whether, after all, the British practise of squeezing the utmost possible out of the taxpayer at a period of reconstruction like the present is economically sound business. Britain does not like to owe money, particularly to foreign nations, and she is making a big effort this and next year lo wipe off out of revenue, and principally out of income and excess profits taxes, a thousand millions, which approximately is the amount owing to America. Whether this is advisable or not in the case of the Motherland, it must be acknowledged that New Zealand conditions are far different from Britain's. This is a very young country, which requires development as rapidly as possible. IP the State is going to take from a man an undue share of the proceeds of his industry and enterprise by taxation, then he will slacken off and lose his ambition, the very worst thing -that could happen to the Dominion. It is quite easy to kill "the g'oose that 1

lays tlie golden egg," and tlie income tax up to tlie £6OOO point is about as heavy as the Government can safely go at present, hut there is no reason why the graduations thereafter should not be increased more than is proposed. Mr. Massey claims that at the end of the current financial year there will be an offset of twenty millions to the war debt, after which he hopes to reduce taxation. As a matter of accountancy this result may be shown on paper, but only as an asset and not as actual 'money. Meanwhile about the same amount of money is being raised to add to the national debt, and more will have to be borrow- j ed next year, and probably for several years to come. There are some good_ points in the Bill, among which may be mentioned the increase in the income tax exemption from £25 to £SO for children, but we would have been better pleased if the C4overnment had decided'to recast the whole of the taxation, overhauled the machinery, simplified its operation, removing the grievous disabilities under which many companies suffer, and adjusting injustices and anomalies that have so often been pointed out by various. Chambers of Commerce and the Press of the Dominion. The present Bill but adds to the patchwork.