TAX DEMANDS

Wairarapa Times-Age, 12 November 1942, Page 3

TAX DEMANDS

IN WAR AND PEACE MR T. A. CUNNINGHAM ADDRESSES ROTARY CLUB. ANCIENT & MODERN GRIEVANCES “Income Tax” was the subject of an address given at today's luncheon of the Masterton Rotary Club by Mr T. A. Cunningham, barrister and solicitor, of Master ton. It was necessary, said Mr Cunningham, that at the outset it should be clear that the address was a discussion on income tax treated objectively, and not merely a loud complanit about it. Maledictions on the heads of tax gatherers were almost as old as time itself. Even the Bible repeatedly referred to “publicans and sinners” and in Biblical language the term “publican” denoted not the keeper of a public house, but a collector of the public taxes, which in those days were farmed out to these tax-gatherers or "publicans” for a lump sum, and they were left to extort what they could from the taxpayers. Thus even in those days the tax-gatherers were classed with the sinners, and modern thought seemed to have found no necessity to revise the classification. As the iniquity of the whole taxing business was thus shown to have already been harped on for 2,000 years, said Mr Cunningham, they could safely let this aspect of it rest at that. HISTORY OF INCOME TAX. War, Mr Cunningham observed, was a fertile soil for taxation. Income tax was a comparatively modern form of taxation, and dated from the Napoleonic wars, when it was merely introduced as a temporary measure. It was repealed after Waterloo, and was revived by Sir Robert Peel in 1842. The rate of tax had varied greatly. In the second half of the last, century it averaged from 6d to 8d in the £l, and at its lowest was 2d. Today in New Zealand income tax (inclusive of social and national security tax) went up to 18s in the £l, plus, of course, excess profits tax where applicable. The very lowest rate which any of them could pay was 6s lid in the £1 in the case of unearned income, and 5s lOd in the £1 in the case of earned income, and the rates rapidly rose with increased income. By way of example, Mr Cunningham said that if a married man with two children had an income from property: of £2850, the combined tax would be £1,578 and he would be left with £1,272. Supposing his income were to go up by another £3,000 a year, bringing it up to £5,850, the tax would be £4,278 and he would be left with £1572. Thus the extra £3,000 a year would in the ; final result mean only an extra £3OO. From this, it would be seen that the limitation of incomes was practically an accomplished fact in New Zealand. “THE CROWN’S SHARE” Income tax had been defined as the Crown's share of the profits, and in many cases at the present time, it was very much the lion’s share. Mr Cunningham quoted from the published balance sheet of a local company showing that in order to pay a 3 per cent dividend amounting to £7,500, it had required to make about £27,000 in profits, the Government’s share being about £19,500. It was thus only to be expected that in deciding such an important matter as the amount which the Crown was entitled to claim, legal questions of great intricacy and subtlety should very frequently arise. So much was this so that most countries had found it necessary to issue special sets of law reports dealing solely with income tax matters. Mr Cunningham went on to show that these taxation disputes involved the highest and the lowest by instancing from the latest tax reports to hand, cases concerning the proceeds of Lawrence’s “Seven Pillars of Wisdom,” and Noel Coward’s play “Cavalcade.” There 'was mention also of a dispute between Earl Beatty’s executors and the Inland Revenue Commissioners, and also how a Mr Mills had been having trouble concerning the royalty received by him for his invention of the well known Mills bomb. At the other end of the scale there was a dispute as to whether the receipts of two professional cricketers from a benefit match were taxable as income or were a mere testimonial. Mr Cunningham then proceeded to deal with some of the details of income tax law, illustrating the various points with examples. He remarked . that, though the King was the first gentleman in the land, his Commissioners of Taxes were not at all squeamish about claiming their share of the gains of any illegal business. : They very properly claimed their share : of the profits of say, bookmaking, or rum-running, with the same equanim- • ity as they took a share of the salary • of a village clergyman/" i