GREAT WAR FINANCE

Waikato Times, Volume 125, Issue 20920, 27 September 1939, Page 9

GREAT WAR FINANCE

INCOME TAX IN 1915 PRESENT RATES COMPARED An increase of 33 1-3 per cent in the rate of income tax was the chief provision of the Great War taxation first introduced by the Finance Act, 1915. In addition, there was an increase of in the pound in the case of land tax payable on mortgages and 50 per cent in the case of graduated land tax. An important change of principle also was involved, for among the incomes previously exempt from income tax were those derived directly from land, but in 1915 income tax was made payable on these incomes.

The income tax rates ruling before 1915 were as follows:—Up to £3OO, nil; £3OO to £4OO, 6d in the pound; £4OO to £I4OO, 6d, plus 3-400 d for every pound over £400; £I4OO to £5600, 13£d, plus 4-100 d for every pound over £1400; over £5600, 2s in the pound. These rates were raised by 33 1-3 per cent in 1915. With the exception of the abolition of the land tax on mortgages and the substitution of an income tax in its place, the principles of land tax assessment were not altered in 1916, but an entirely new scheme, known as the excess profits tax, was instituted. The 1915 system remained, with increased rates, for ordinary income tax. When the excess profits tax was found unsatisfactory and inequitable, a system of progressive land and income tax, with a special war tax on incomes, was adopted in 1917.

Yield in 1915

In the year ended March 31, 1915, income tax yielded £540,318, and there were 13,967 taxpayers. This number was increased to 20,072 in 1916, when the amount received was £1,392,119.

When the increased income tax rates were announced by the Prime Minister, the Rt. Hon. M. J. Savage, in the 1939-40 Budget, which was presented on August 1, it was estimated that they would yield £9,600,000. The present increase of 15 per cent will bring this figure to over £11,000,000. The actual amount collected in the year ended March 31, 1939, was £9,303,495.

The higher rates announced last month were as folows;—Up to £2OO, nil; £2OO, 2s in the pound; increasing by 1-1 OOd for every pound of taxable income up to a maximum of 8s 7d in the pound, which was reached at £7900. The general exemption was reduced from £2lO to £2OO.

Under the new rates, the minimum tax payable is now 2s 3 3-5 d in the pound, rising to a maximum of 9s 10 9-20 d.