TAXATION.

Auckland Star, Volume LXI, Issue 202, 27 August 1930, Page 3

TAXATION.

INCOME TAX EQUITABLE.

SUGGESTED CHANGES.

CLASSIFIED USES OF MONEY.

(By A. J. HUTCHINSON.)

I have had a few years' business experience, and on occasions I have had the job of doing, in some commercial concerns, just what the Minister of Finance has to do in connection with tlio Dominion affairs —endeavour to make ends meet. My plan has always been to try to reduce overhead expenses and direct the available capital from nonproductive to productive lines and increase the number of turnovers. I have always said that .the man who criticises should, at the same time, bring forward his counter proposals. Productive Investments. In my opinion ,one of the most equitable taxes is the income tax. You have only to pay what you like; you, the individual, determine the tax you will pay by the amount you are satisfied to earn. I do not agree, however, with either the method of assessment or collection. The tax payable should be varied not only by personal effort, and one or two other items, but in sucli. a' manner that would make it profitable for men to direct their capital from so-called o-ilt-edged securities—Government and municipal loans and debentures, into the productive activities of the Dominion. These I consider to be: (1) Education. (2) Land development and settlement. (3) Secondary industries. • I would suggest that deduction be allowed for money loaned or given to our universities and agricultural colleges; that a lower rate of income tax be charged from capital loaned to farmers and all classifications of land development; that lower rates be charged on incomes derived from secondaiy industries; that the highest rate be charged on profits made from the importation and sale of overseas goods; the second highest from investments in bank, insurance or other non-productive shares and professional activities —other than educational; that the system be applied to death duties, i.e., that all gifts to educational or welfare institutions be exempt from death duties; that there be no exemption, i.e., that every adult person, male' and female, be required to furnish a return of his 0" her income (no matter how email) and pay a tax, be it only from 1/ per year upwards. Exemption is the cause of an enormous loss of revenue, and does not give the Income Tax Department a reasonable chance of overcoming fraud. It would not hurt the individual earning £52 per year to fill in a form showing from whom and how he earned his or her salary and to pay a tax of 1/. Town and Country.

In brief, what I am suggesting is— first, that the present system of income tax assessment is designed principally for the purpose of raising revenue, which, in my opinion, is, or should be, only one of the aims and objects of ail Income Tax Bill. v As we must have income tax, lotus s'o design* it that it will direct moneyfrom Government, municipal, and other gilt-edged securities to the land.

I venture to say that if th© tax on incomes derived from city mortgages was double that of the tax on incomes derived from farm - mortgage*, it would have the effect of diverting investments from the city. ■ It would do the Dominion little or no harm' if building activities were diverted from city to country. Seventy homes in the country at fSOO each is better than a £5000 building, in the city. £700,000 invested in land improvements, though it return to the Government only one half the amount ill income tax, is a better investment;for the. Dominion than the same amount in debentures or mortgages on city properties. . •

Income tax return forms should 1)6 prepared to suit the requirements of all classes of the community. A man 05 woman in receipt of a salary or wage of £1 per week should 'be required to go to the post office, obtain a form,' fill in his or her name, address, occupation, employer's name, wage earned, pay the 1/ and post the return. From this source alone the Department would receive a very considerable sum of money Pf r _ year with no hardship to any individual. The youth earning £1 can afford 1/ income tax per year and the man earning £6 can afford 6/ per year. It would also- give the Department the ■much-needed information to catch the tax dodger. Another most desirable innovation would be provision for progress payments. Hundreds of individuals and ■business houses , would take the advantage of progress payments for both income tax and anticipated death duties 11 it was to their advantage to do so m other words, if they were allowed" a' discount.