LEADING DETAILS

Wairarapa Times-Age, 28 June 1940, Page 5

LEADING DETAILS

THE NEW TAXATION DEMANDS FIGURES OF WAR EXPENDITURE. NATIONAL SAVINGS SCHEME. Some of the more important details of the proposals contained in the Budget are as follow: — Income tax is to be increased to 2s 6d in the pound on the first £lOO of taxable balance, and there will be a progressive increase of 3d in the pound for each subsequent £lOO, with a maximum'of 12s in the pound. The personal exemptions are unchanged. The new basic rate of taxation for companies is to be increased to 2s 6d in the pound. As was the case last year, the rates of tax for both companies and individuals will be increased by 15 per cent, this addition being credited to the War Expenses Account. ' . NEW & OLD RATES. As an indication of the effect on personal assessment of the new income tax rates, the following are examples of the amount of tax payable last year and this year respectively upon representative taxable balances, by which is meant the taxpayer’s income less the standard exemptions allowed.

This means that a single man with an income of £3OO will pay £l4 7s Gd income tax. A married man without children with an income of £350 would pay a like amount, and a married man with a wife and one child would pay a similar sum on an income of £4OO. It is also proposed to bring all State trading activities into line as regards income tax. At present the Government’s electric supply undertaking, the Internal Marketing and State Coalmines Departments, and the Commercial Broadcasting Service are exempt from such taxation. It is proposed to introduce legislation to make these activities liable for income tax. At a later stage there will be placed before the House proposals for the establishment of the procedure necessary to transfer to the State the whole of any excess profit made during the war period. STATE TRADING. State trading activities are to be liable for income tax. Death and gift duties are increased to bring in an estimated additional amount of £750.000 per annum. There is to be a national security tax of Is in the pound, calculated on the same basis as the social security tax. The sales tax is to be increased from 5 per cent to 10 per cent. WAR FINANCE. The estimated war expenditure for the current financial year totals £37,500,000. of which £19,750,000 represents expenditure overseas and the balance of £17,750.000 expenditure in New Zealand. The Government's policy for financing a national effort is to tax to the economic limit for war purposes, and borrow for essential public works and the balance of war requirements. The United Kingdom Government has agreed to finance the cost of New Zealand forces overseas on a loan basis, but every effort will be made to meet from the Dominion's own resources as much overseas expenditure as possible, thereby relieving the United Kingdom. The ordinary Budget estimates involve a slight reduction in revenue, but this is partly offset by a decrease in expenditure. After eliminating war expenditure, now included in a separate War Expenses Account .there is a net shortage of £1,150,000 required to balance the Budget. It has therefore been necessary to provide additional taxation revenue for this amount for the'Consolidated Fund and as much as possible of the £17.750.000 of war expenditure in New Zealand. COMPULSORY LOANS. The total revenue of the War Expenses Account is £14,120.000 leaving a balance of £3 630.000 to be borrowed for expenditure in New Zealand. For these New Zealand requirements, and to provide as much as possible toward overseas costs. a national savings scheme is to be introduced to cater for small investors, while loans with

a currency of 10 years or more will be available for larger investments. The latter loans for war purposes are to be free-of-interest for three years or the duration of the war, whichever is the longer, and not exceeding 2J percent for balance of term. Many have already subscribed on interest-free basis, and the Government proposes to introduce a procedure whereby those with means will if necessary be required to subscribe appropriate- sums to war loans, credit being given for amounts already received. The public works programme involves the borrowing of £15,000,000 internally as compared with £19,000,000 borrowed last year. The net ’increase in the public debt last year was £18,937,264, of which £16,857,264 was raised in New Zealand.

Income Tax. Taxable Last year. New proposals. balance £ £ s cl £ s cl 100 .. .. 11 19 7 14 7 6 500 .. .. 69 9 7 86 5 0 1.000 .. .. .. 162 18 4 208 8 9 2,000 .. .. 421 13 4 560 12 6 5,000 .. .. .. 1,772 18 4 2,384 16 3