NEW TAXES.

Auckland Star, Volume LXXI, Issue 152, 28 June 1940, Page 9

NEW TAXES.

MILLIONS NEEDED.

ALL-ROUND RISES.

SPREADING WAR BURDEN.

INDIVIDUAL* AND COMPANIES.

((•By NegiUph.—Parliamentary Reporter.) WELLINGTON, this day.

Most of the total estimated expenditure of £37,500,000 for war purposes for this year should be found from taxation, said Mr. Nash, in outlining the extent of the burden that would fall on individual taxpayers.

"The special items of war taxation imposed last year would this year, if left undisturbed, produce approximately £3,500,000," he said. "Having regard to the destructive nature of the expenditure it is imperative that much more than this should be provided from revenue. In fact, it seems clearly in the best interest of the Dominion that we should aim to provide from taxation the greater part, if we cannot manage the whole, of the £17,750,000 required for expenditure within New Zealand. "Consideration was first given to an upward revision of the rates of income tax. In order to obviate certain anomalies which would have been accentuated by increasing the rate under the graduated system used during the last few years, it has been decided in the ease of individuals that the new rates will be on a 'step' basis under which each pound of taxable income will be taxed at a rate determined by reference to the particular income-group into which it falls. Starting Rate of 2/6 in £. "The starting rate will be 2/6 in the £ upon the first £100 of taxable balance; 2/8 in the £ will be payable on the second £100 of taxable balance; and 3/ in the £ upon the third £100 of taxable balance; and, so on, by an increase of 3d for each £100 of taxable balance up to maximum rate of 12/ in the £, which will be payable upon all taxable income in excess of £3800. "The advantage of this system lies in Jlie fact that every taxpayer, no matter what his income, pays the same rate of tax upon each succeeding pound of taxable income; it is the logical counterpart to the grant of a personal exemption of £200 to every taxpayer, regardless of the size of that taxpayer's income. It is not proposed to alter the personal exemption of £200 or the exemptions for wife and children, or the provision relative to adding a percentage to the tax on unearned income. Company Taxation. In the case of companies, he went on, the graduation method to be applied will be similar to that used last yeai*, but the new rate will be 2/6 in the £, Tising by graduations of 1-100 th of a penny to 8/ in she £ at £6600, and rising thereafter by graduations of 1-loOth of a i>eii»y to a maximum rate of 8/9 in the £ on all income over £7930. A further change proposed is the increase to the naximum company rate

of the tax payable upon interest reoeivin terms of debentures issued free of tax by companies. This change abolkhes the advantage hitherto secured by companies in respect of this class of debenture interest.

A* was the case la*t year the ratee of tax for both companies and individuals will be increased by 15 per cent, this addition being credited to the War Expenses Account.

As an indication of the effect on personal assessments of these new rates, he quoted the following examples of the amount of tax payable last year and this year res|>ectively upon representitive taxable balances, by which was meant the taxpayer's income the standard exemptions allowed. INCOME TAX. Taxable Xrw balance. Last year. proposals. ® * s. d. a h. d. 100 11 1!) 7 14 7 B «00 60 0 7 Sfi 5 0 1000 1«2 18 4 208 8 9 2000 421 13 4 TifiO 12 6 "000 1772 18 4 2384 16 3 "This means that a single man with an income of £300 will pay £14 7/6 income tax," .said the Minister. "A married man without children, with an income of £350, would pay a like amount, and a married man with a wife and one child would pay a similar sum on an income of £400. State Trading To Be Taxed. "It is also proposed to bring all State trading activities into line as regards income tax. At present the Government's electric supply undertaking, the Internal Marketing and State Coal Mines Departments, and the Commercial Broadcasting Service are exempt from such taxation. It is proposed to introduce legislation to make these activities liable! for income tax. "At a later stage there will be placed , before the House proposals for the establishment of the procedure necessary to transfer to the State the whole of any excess profits made during the war period. "With these additions to the field of taxation at the new rates, the income tax will, it is estimated, yield £14,450,000, an increase of £2,400,000 above what would have been received on last year's basis of tax. Approximately £2,100,000 of the increase will go to the Consolidated Fund, said Mr. Nash, and the balance of £300.000 to the War Expense* Account. The benefit of practically the whole of this additional revenue from income tax will indirectly go to war expenses through the transfer to that account of £1,050,000 death duties hitherto paid to the Consolidated Fund.

In addition there is available for the Consolidated Fund £1,000,000 profits from the issue of the Dominion's own silver coin.