LEVY ON INCOMES.

Ashburton Guardian, Volume 60, Issue 223, 28 June 1940, Page 3

LEVY ON INCOMES.

NATIONAL SECURITY TAX. RATE OF SHILLING IN POUND. YIELD OF £6,000,000 EXPECTED. WELLINGTON, June 27. After dealing with the items ol revenue and expenditure (shown under the heading Budgetary Position) the Minister proceeded:— All these items with £1,900,000 from L the 15 per cent, super tax on incometax will produce a total of £6,120,000, but- this falls far short of the £17,750,000 required to cover estimated defence expenditure in New Zealand, quite apart from what is required for maintenance of our forces abroad. Accordingly, the Government have reached the conclusion that this yield from, taxation must be at least considerably increased. It is not possible to do this except by forms of taxation that will reach practically every one in the Dominion. In any case every one is vitally concerned in the outcome of this war, and, - therefore, should make some appreciable contribution towards its cost.

It is therefore proposed to impose a direct national security tax of Is in the pound on all income,, calculated on the same basis as for social security.

Everything that we prize including our social-security system is dependent on winning this war and maintaining our national security. In the grave state of emergency that exists I feel sure that every one will gladly make his contribution to this tax. It will be paid by every one and every one will know that he or she is paying it. The man with £2OO a year will pay £lO in national security tax while the man with £20,000 a year will pay £IOOO, this, of course, being additional to what he is required to pay in income-tax and surtax. In fact, any individuals with such an income will, if it is all income from investments, have to pay in direct taxation—i.e., income-tax, social security charge, and national security tax—no less than £16,427 18s 4d. The proposed ' national security tax for the balance of this financial year should yield about £6,000,000. Theoretically it would be more equitable if the jjroposed national security tax could be adjusted according to income and family responsibilities—i.e., an income-tax graduated down to reach the lowest incomes. However, on the lower incomes the only practicable method is a flat tax collected at the Source. . This is recognised in the social security tax. A national security tax of.4s to 5s per week may impose some degree of hardship upon families with several children on incomes of £4 to £5 per week. To counteract the possibility of hardship the Government proposes to amend the Social Security Act by extending the family benefit to cover the second and each subsequent child instead of the third and each subsequent child as at present. At the other end of the income scale provision is made so that the aggregate effect of income-tax at “unearned’ rates, social security charge, and national security tax will in no case exceed 17s 6d in respect of any one pound of income.

In addition to the foregoing it is proposed to double the present rate of sales tax, making it 10 per cent., and to credit the extra revenue (estimated /at £2,000,000 for the balance of this financial year) to War Expenses Account. . If by all these means £14,120,000 is obtained from taxation for war expenses, it will be necessary to borrow £3,630,000 for expenditure in New Zealand and £19,7.50,000 for expenditure overseas. For the latter, as previously explained, we can rely upon the arrangement made with the British Government, but should not do so more than we can possibly help.