TAXING INCOMES.

Auckland Star, Volume XLVI, Issue 66, 18 March 1915, Page 7

TAXING INCOMES.

SHOULD EXEMPTION BE LOWERED ? AX UNPROFITABLE PROPOSAL. (By Telegraph.—Special to "Star.") WELLINGTON, tiis day. In seeking additional supplies for the public purse during war time, it is generally assumed that the Minister of Finance will follow a well - established war precedent by increasing the income tax. The question arises whether its scope will be extended by reducing th e exemption of £300, and bringing in those whose incomes are, say. £160 or over, as is done in England. This would result in a very large increase in the number of taxpayers, but the yield might not b e worth the extra Trouble of collt>ciion. There are over 14.000 payer* of income tax in New *S.eaiand, of whom no fewer than 0.035 pay noon amounte under £700. The inclusiei of smaller fry would add many ■thousands of returns, bnt pTobably little extra cash after allowing for exemptions. Unfortunately, the Government Departments do not appear to possess any figures that couJd be even an approximate guide. Tn the past all that was necessary was to enrol the men receiving over £."00. Departmental inquiries usually oni"r a certain margin below t.iat figure. l"t flo not go down aurwhere near £2ft.l. feme sort of a guide may l>e found in the statistical figures of New South 'R-'alas, hut it must he taken with refervations. Durinj: the nine veara. lSflfi--1907 the <Spw South Wales income tax conditions were snrh that records were, kept of taxable incomes from £200 upwards. Taking an avprage of those nine years, the number of income taxpayers v\ New South Wales was 21.524. "and the number of taxpayers with an income of between £200 and £300 was 10.445: that is to say. 48 per cent, nearly half of the total number of taxpayers, was in the £200- £300 division. CATCHING THE LITTLE MAN. As for the possible revenue to be obiftned by widening the net, it ig fairly evident that there is not much profit for the Government, and it must be remembered that the tax. after being assessed, still has to be collected. For various reasons, more or less obvious, it i B more difficult to collect from the small taxpayer than from the large. At present there are 14.277 payers of income tax. To get thie result inauiries have to be Jnade concerning over 40.000 people, and the balance slip through the net. If it takes a net of this size to catch 14,277. how big a net. will be required to enclose double that number? A ho3t of petty investigations will be required, and many blanks will be drawn. At present one in every three casts of the net lands a fish, and when the net its dipped "<nto th c lower waters, the average haul •nay be less. ? ma ]] take more cateh'■ng. and yield to th<' fisherman a lower return. Clear! v an extension downwards of thp taxable area means much more machinery working at a lower rate of profit. Not only is the yield per head email in the £200- £.300 division, but the cost of assessment and of collection of revenue must bo relatively large. Assessment difficulties would be especially great in connection with the small businesses. Many small tradesmen have an idea that they are making good wa«res, bnt the idea is not very definite.-Prob-ably their books are few. and not very illumining, and their stocktaking not a fery tangible operation. To clear up the situation, an officer of the Income Tax Department may have to make an investigation and assessment, and may possibly arrive a t the conclusion that the business yields enough profits to carry a. 20/ tax. or ecarcely enongt to pay for the time taken to *"w>B«tra4e **** ***• " '". .