THE INCOME TAX.

Taranaki Daily News, 29 November 1921, Page 4

THE INCOME TAX.

In the House last week, Mr. Massey stated that income tax is heavier in Australia than in New Zealand. “The maximum that the individual pays in New Zealand,” he added, “is less than the maximum the individual pays in Australia.” This is literally true, but the statement gives an entirely wrong impression. Company taxation in New Zealand is nothing short of confiscatory, profits being taxed up to 7/6 in the £ (and increased last year to 8/9). The tax really amounts to 10s in the . £ on companies with a net income of £lO,OOO, because several charges which must be placed to the debit of profit and lose are not allowed as deductions for income tax purposes. In England a shareholder of a company is taxed according to the amount of his income. In Australia there are two taxes, State taxes and Federal tax. All the States tax companies, but the taxes are comparatively small, ranging from 1/- in the £ in the ease of Victoria to a possible maximum of 3s in the £ in Queensland. The Federal tax on companies is 2s 8d in the £ on their undivided profits only. Companies pay no tax upon the amounts distributed as dividends, so if they pay out all their profits no tax is levied. Shareholders pay the tax upon their dividends direct in proportion to their means. This is what is being asked for in New Zealand. The effect of income tax can be guaged by the amount paid pel* head in Australia and New Zealand. For the last financial year it averaged £4 12s per head in Australia, and £6 9s in New Zealand. That proves absolutely that income taxation is almost 50 per cent, heavier in New Zealand than in Australia, the very opposite to the claim made by the Premier. Income taxation was increased to meet a part of the cost of the war. Chiefly by its means the sum of twenty millions was accumulated. It was war time, and the public felt they should make financial sacrifices. The war has been over for two years, but war taxation is being continued, principally to meet the extra cost of administration. Taxpayers have a right to ask for a reconsideration of the whole basis of income taxation. Unless a heavy reduction is made, enterprise will be killed and industry greatly affected. In Australia the comparative lightness of company taxation is acting as a spur to. manufacturing, new industries being established every week. Who, under present conditions, would be so foolish as to establish a new> company in New Zealand, or, indeed, extend present operations?