HEAVY TAXES.

Auckland Star, Volume LXX, Issue 191, 15 August 1939, Page 10

HEAVY TAXES.

LOW WAGE EARNERS.

EFFECTS OF NEW SCALE.

SMALLER EXEMPTION LIMIT.

How the dropping of the exemption limit for income tax has affected small wage and salary earners—tradesmen, cleik.s. women and others—has been brought home to many Aueklanders who have received ilielr tax assessment*, under the new scale of exemptions, during the past fortnight. For many the tax payable, formerly only a few shillings, has been doubled, trebled or quadrupled, and many who were exempt now find themselves called upon to pay for the first time. Their incomes have not changed. They are receiving the same wage or salary as last year or the year before; their family and other responsibilities have not decreased; the coat of living has not fallen; the purchasing power of the pound has not increased; yet the Government has decided that these small earners must pay more. For them this is another addition to the cost of living, another deduction from the barel- adequate sum they have each wet-K to purchase the necessaries of life. Reaction of Taxpayers. "It - * the second tax- increase within M.\ month-." .-aid a wage pariiPr this niiil'liillg. "The wages tax \\a* pushed up from s<l to 1/ in the £ in April, and that took nearly it more. Now bus fa ITU are going up. Potatoes are almost too dear to eat. and nearly all other prices are rising. How can we pay more income tax';" "If tlie Government knew how hard it is for ftimilUfi to budget, it would never have' put eueh burdens on us.' , declared the wife of a t nide'lliaii. with a uuiiihei- of young children. "I'd like to see tKein trying to make endu meet on the few pounds a week we ha\e to >]hmi(l,'' saiil another. "We're being crushed down with tuM'H to pay for Imjje public work.- ami n whole lot of other tiling* wo don't want." was the plaint of a woman with a small home and several children at wlioi.l. » There Here others who ripnko in the same strain. How could they pay the extra taxes'/ Instead of lowerin'.' the exemption limit the I Joveinment should raise it. That was the view of a group of workmen di«*cu»>ing taxes in the lunch hour. If the purchasing power of the £ IiH.I fallen the limit of exemption should lie adjusted to cufintcruet the effects, not to make The position worse. They could not see the logic of the <iovi»r ent's attitude. It appeared to them a case of trying to make them all bankrupt t-i supply the needs of Department* which cared nothing for the troubles of the small taxpayer.

The "White Collar" Group. I Another group oppressed by tlie high ■ taxation i.< that in the range of incomes i l-eiv iv-ii £r<n and fiKHI a year—the "white collar , ' group—which has a costly -tanrlnid of If visits to maintain, and is tpxtnl b"tween £20 and £30 a year. People in tliM range have been silent sufferers for a number of years under Jan uneven m-nle of taxation, which bears most heavily on income* around £10 a week. Thirteen years ago the exemption j from income tax was £:JOO, that is £100 I higher than to-day, less the £50 exempi tion for wives, which wan not then 'allowed. Another factor affecting the comparison is that at that time there wus no wagei* tax. Today the wages tax amounts to more than £12 10/ a year for tlie average wage-earner. The £.'UM) exemption wa« in force for thirty years. Between 1!)17 and 1926 it wan allowed on all incomes up to £<>00, diminishing thereafter by £1 for every £ increase in income until it disappeared at £900. From 1927 to 1930 tlie graduation was from £450 upwards, beginning at £1 for every £2 of income from £450 to £750. and then decreasing to £1 for £1 to £900. In 19.51 the exemption limit was reduced by a needy Government to £200. The limit decreased by £1 for every £3 on incomes up to £s<>o, after whiili tlie decrease wae £1 for every 30/ »ip to £SOO. There was a further reduction of £50 in the limit in 1933. but this wrns offset to some extent by an allowance of £50 for wive*. It we*, therefore, a reduction aimed chiefly to catch bachelor*. In MKili the Labour CJovernmeiit made the £210 exemption apply for all incomes, but against this the rate of tax was made heavier on large incomes.

Pressure of Budget Needs. Generally, the reduction* which have occurred in the exemption limit have been made when additional tax revenue luts brcn required to balance the Budget estimates, and these reduction* once made ha\e become jwrmanent. In a comparison of the position to-day with that in l!)2ii tlie striking feature is that classes in the comnninity which wore then exempt from direct taxation in any form are now required to pay amounts which, including the wages tax, range from £12 10/ upwards, and salary earners reoeivinji between £.*>oo and £000 are paying in direct taxes over £1 a week, which is double or treble the amount pa'd 10 to 20 years ago. If the exemption limit to-day, in relation to that in 1020, were based on the comparative purchasing power of the £ it would be not £20<) (plus £.30 exemption for wives) but more than £300.