REFLECTIONS.

Auckland Star, Volume LXVII, Issue 185, 6 August 1936, Page 8

REFLECTIONS.

BUDGET REVIEWED. INCOME TAX REQUIREMENTS. "LITTLE MAN, WHAT NOW ? »

(By J. 0.8.)

Broadly speaking, opinions expressed to-day in the city on the Budget proposals introduced into the House on Tuesday night were those of relief and satisfaction, tempered by certain, reservations. Feelings of relief and satisfaction arose from the fact that the Budget was on orthodox lines, while such criticism as there was concerned the possible cffects on business as a whole. But , now that business men have had time to open their newspapers in the quiet of -their firesides they have had time to explore,a different angletile effects on their individual pockets, apart from that on their business.

It is possible now that they arc a little less relieved, a little less satisfied, while their reservations are greater; Mr. Savage lias often said' that he favours the direct method of taxation. Possibly the opinion of the man in the street would be different, because lie does not mind paying subtly more for a commodity; ' he does, however, notice his income tax, because, so far from being a subtle payment, that is painfully blatant. Income Tax Figures. Income tax payments, therefore, might repay investigation. There arc not many wealthy men in New Zealand —that is, as perhaps an America or an Old World understands wealth. It would, be fair to say that the majority of income tax payers in the Dominion lie between the income ranges of £400, or perhaps £350. and £000. Under the alleged simplification of the income tax system, it is between these incomes that the payment charge steepens, while it is virtually unchanged at £800. On. the £400 basis, payment has increased from £2 13/10 to *£3 8/; £500, from £7 11/8 to £12 0/8; £000, from £15 11/0 to £22 8/. Outside that range the increase flattens. The increase for the £70Q is from £28 0/3 to £33 8/, while the £800 income is virtually unchanged, so that the recipient is twice blessed, or, to put it another way, to him that hath shall be given. The increase is merely from ■ £44 0/3 to £44 14/8. The man on the £350 income has received help to the tune of 5/3. Under the old scale his tax was that amount. Under the new, he is tax free. These figures are for a married man with two children.

Approximately proportional increases are shown between these incomes for all married men, while the single man without dependents, for whom it might be added, 110 one has a great deal of sympathy, the charges are considerably higher. The single man without dependents who rejoices in an income of £400 a year finds himself liable for £17 G/9 instead of £8 7/7. The married man with no children with the same income will pay £12 9/8 instead of £6 9/4. | The man* with one child will have to find £7 '16/.9 instead of £9 9/10. At •the thVee-children mark, the father will : |ie the better off by, 2/9, because under the new scale-lib is untaxed. rV Analysis as a Percentage. However, while the married man with • one child earning £400 finds his income tax raised by 71.4 per cent, the man in the same circumstances, except for the minor difference that he earns £1500 a year, has his tax increased by 4.10 per cent. If, a man has two children and has £400 a year to support them he will pay 28.33 per cent more. If, on the other hand, he has the same number of children, but an income of £1500, he will find lie has to pay all of 3.24 per cent more.. The percentage is reversed when it cbmes to • comparing the same two incomes when two men have each three children. On £400 a man finds his tax reduced ad infinitum, because he pays •nothing instead of 2/9. The man with : £1500 will have to pay '3.7 per cent more. There is, still,-some consolation. Those, who have to pay the larger percentages will be able to find an inordinate pleasure in. knowing that the man who hat- £1500 a' year to spend 011 himself will have to give the Government 10.04 per cent more.

The man on £000 a year with three children will be wondering what especial deity has smiled on his neighbour more fortunate than himself by £200. While the £000 man finds his commitment increased from £12 15/8 to £17 0/9, his neighbour who has £200 a year more to spend will actually have to. pay less tax, £38 10/9 instead of £39 3/5.

These figures have been based on incomes wholly earned. The personal exemption figure of £210 has been allowed for, as well as the £50 in respect to a wife, and also exemptions for children. No account has been taken of such items as insurance policies.

Another aspect will occur to the man sitting at home over his fire. Prices may rise as the result of increased taxes on businesses. It may be the old, old story. If taxes are raised, business houses will try to pass them ou to the public in the form of increased prices for goods. The same line of reasoning may apply to pensioners and others who are to benefit under the Budget. They also are finding that their everyday costs are rising.