The Daily News. THURSDAY, OCTOBER 5, 1922. TAXATION CONCESSIONS.

Taranaki Daily News, 5 October 1922, Page 4

The Daily News. THURSDAY, OCTOBER 5, 1922. TAXATION CONCESSIONS.

The Taxation Amendment Bill, which was introduced in the House last week, affords a certain measure of relief to the taxpayer. The system of taxation has not been altered, as has been so insistently urged during the past year, but the scale has been lowered, and will now run from 1/- to 7/4 in the pound, as against 1/3 in the case of persons and 2/3 for companies to 8/9 in the pound. The reduction, therefore, amounts to about one-eightb. The supertax on land is to ibe reduced by ten per cent., or I one-twelfth in comparison with the net rates of last year. The Government has followed the suggestion made by the Taxation Committee to allow losses of earlier years to be set against profits earned within the three following years, but this concession is not to be available until next year. The principle is a sound one, but the Government is not taking any risks of losing revenue in the meantime, when traders have been hard hit, and can fairly ask for some relief. The English system of assessment of incomes enables the taxpayer to average his results over a period of three years. Mr. Massey’s proposal’is somewhat different. The section of the Bill in question provides :

Any taxpayer who satisfies the Commissioner that- he has in any year incurred a loss in any business carried on by him shall be entitled to claim that such loss be carried forward, and, so far as may be, deducted from or set off against his assessable income for the three following years; Provided that any relief under this section shall be given, so far as possible, from the first assessment within the aforesaid period of three years, and, so far as it cannot then be given, shall be given for the next assessment, and.so on.

It will thus be seen that the taxpayer will be unable to obtain relief until 1926, and even then only if losses are made in 1923-24, It is something to obtain the affirmation of the principle, which advantageously could have been a part of the Land and Income Tax during the past two or three years when taxpayers have had to pay the maximum income tax rate one year to find that all their profits, and more, have disappeared during the following year. Another alteration to be commended is the provision permitting a taxpayer to count losses in one business against profits in another. Cases are frequent, particularly in’ the large centres, where men interested in several enterprises have made good profits in one business, but lost them all in another, yet have been called upon to pay taxes on income that was not in fact earned. The removal of this anomaly Was long overdue. Coalowners are to be allowed to provide for the depreciation of their assets, and other minor concessions are made. The total amount of relief is estimated by Mr. Massey at £939.000, but as the assessable income of the country will be substantially less than estimated, it is probable that the concessions will not amount to more than two-thirds of this sum. Mr. Massey could have gone further, particularly in view of the reduction in expenditure he mentioned, amounting for the five months of the financial year to nearly two millions sterling. There never has been any real justification for the high taxation. It was only levied because of the huge increase in the cost of .government. The proper thing, of course, was to have taken a. firm hold of the expenditure instead of levying further taxation, which resulted, as anyone could have anticipated, in further increasing the cost of living, curtailing extension and development, discouraging enterprise and causing unemployment. Large concerns doing good work for the community have had all the life knocked out of them, and it will take them a long time, even with reduced taxation, to get on their

feet again. The present proposals, however, will, as we have said, afford some relief, and are an earnest of the Government’s intention to bring down taxation to reasonable levels. At Levin the other evening, Mr. Massey frankly acknowledged that no country can possibly carry the load of taxation which New Zealand was now carrying, and that if we are to get back to normal prosperity we must reduce the cost of government and reduce taxation. To this end he expressed the intention to make further reductions, and was prepared to take the consequences. These he need not fear, for it is the only thing to do if the country is to pull round. With a maximum income rate of 5/- in the £ the country would immediately respond and be able to recuperate and progress. The Labor members, of course, can see no merit in the proposals, which they profess to regard as a sop to the wealthy classes. Their attitude can be understood, for their idea of helping the rehabilitation of the country is to levy confiscatory taxation, enabling them in good time to nationalise the means of production, exchange and distribution—a beautiful theory but absolutely,, impossible of attainment in this imperfect world, as Lenin and Co. are finding out. Labor’s attitude on this matter should be carefully noted by those who have the interests of the country at heart and are anxious to see it return to normal as early as possible.