LOWER TAXATION.

Auckland Star, Volume LIV, Issue 132, 5 June 1923, Page 4

LOWER TAXATION.

The Prime Minister announces that he will reduce taxation by two millions. The only two details of reduction that he gives are a lowering of the income tax maximum from seven and fourpence to five shillings, and a return to penny postage. Since however postage is not included in official taxation returns, the reduction in the rate may be ;v benefit additional to the two millions promised. For the year recently ended, fifteen and a-half millions was collected in taxation, according to the Government's compilation, as compared with £10,:i70,000 in 1921-22 and £22.184,000 in the peak year of 1920-21. A reduction of two millions will, therefore, be a substantial percentage. It may be remarked, however, that this reduction may not be entirely realised. Mr. Massey may budget for a reduction of two millions, but the increase 7n population and production, and perhaps an improvement in prices, may give him so much more wealth to work upon that his estimate of what the new taxes will bring may be exceeded. The very reduction in rates will sooner or later, by promoting industrial prosperity, help to increase the yield from taxes. The proposed lowering of the maximum income tax rate to five shillings is in accordance with the unanimous conclusion of tlie Taxation Committee. The committee noted (this was a year ago) that the official estimate of the immediate loss of revenue involved in such reduction was a million, but it considered "that the effect of an immediate reduction uf the maximum graduated rate would within a comparatively short period bring in more revenue than the amount likely to be received by the retention of the present rate." Mr. Massey said nothing yesterday about a promise lie is reported to have made at Hamilton, that farmers' incomes should be exempted from income tax. The farmers say that as they pay land tax they should not pay income tax. but there are many other taxpayers who have to pay both. We do not see why a wealthy man who derives his income from rural land should pay only land tax when a town business firm has to pay income tax as well as land tax. The farmer has a better case when he urges that he is subject to greater fluctuations of fortune, owing to bad seasons and depressed markets. This is an argument for allowing him to average his profits over a number of years in making his income tax return. The argument attributed to Mr. Massey. that 'the farmer is too tired after his day's work to keep his accounts properly, is not worth consideration. However, we should know more about the Government's programme in a few weeks. Tn the meantime Mr. Massey may be complimented on giving the community notice of what it may expect. Such notification lessens the wide gap that is allowed to exist between the end of the financial year and the appearance of the Budget.