CUTS IN INCOME TAX

Press, Volume LXXXIV, Issue 25588, 1 September 1948, Page 5

CUTS IN INCOME TAX

AUSTRALIAN BUDGET CONCESSIONS PROPOSALS APPROVED BY FEDERAL CAUCUS (N.Z. Press Association—Copyright) CANBERRA, August 31. Income tax cuts totalling about £29,000,000, ranging from 33 per cent, on low incomes to 3 per cent, on high incomes, have been approved by tne Australian Federal Parliamentary Labour Party. It is expected that the cuts will operate either from July 1 last or from October 1. but that reduced weekly tax deductions from wages will not begin until January. The income tax cuts form part of Budget concessions totalling £60,000.000 which were approved by the Governmnent caucus on the recommendation of the Prime Minister (Mr Ctufley). Other main concessions are: (1) A reduction of indirect taxation by £10,000,000. (2) An increase of 5s weekly in pensions. (3) An increase of 2s 6d weekly in the child endowment, making the new rate 10s a week, payable on all children except the first. (4) An increase of 2s in hospital benefits under the Federal State free hospital scheme, making the new rate 8s a bed. (5) Free medical treatment in repatriation hospitals for war widows and wives of war pensioners. (6) Liberalisation of the means test to allow an Increase in permissible Income from £1 to 80s weekly and to £3 weekly for a married couple. (7) The raising of the property qualification figure from £660 to £750. Mr Chifley Presents FropomUa In presenting his proposals to the caucus, Mr Chifley said that future Commonwealth expenditure would bo at least five times pre-war expenditure, and that propaganda about taxation was doing more harm than taxation itself was doing. The idea had been spreading that every shortage and hold-up of industry would vanish if only the taxation rates were reduced. Proof that the Government policy had been sound was in the present state of the country’s economy. Clearly the Government’s policy had not checked employment, which was everywhere at tne maximum. "To cut taxes right and left would have been popular,” he added, “but the Government would have been forced, into heavy and increasing borrowing. Lack of revenue would have blocked many new and valuable services. Pensions and other benefits could not have been increased. There would have been an inflationary boom, leading probably to disastrous collapse and unemployment.” The Australian economy had been stabilised and expanded until, for general soundness and future promise it compared favourably with any in the world, said Mr Chifley. Large surpluses were not being put away in Government accounts. The Budget would be balanced this year and proper provision would also be made as required by law for social service payments qnd similar expenditure. Temporary war-time expenditure for which borrowing was justifiable had been giving way to peace-time expenditures for which revenue was the only sound means of finance. Mr Chifley gave five pointers to larger Commonwealth expenditure:— (1) Heavy rehabilitation and repatriation costs would continue for yean. (2) War debt charges were approaching £50,000,000 a year. (3) Post-war defence cost £60.000.000 to £70,000,000 a year, compared with less than £10,000,000 before the war. (4) Social services had already passed £70,000,000 and they would continue to increase. (5) Costs in general had increased greatly. Income Tax Comparisons On the new income tax scale, a man with a dependant wife and two children will save £3 9s a year if he earns £4OO, £8 Ils if he earns £5OO. and £lO 7s if he ea rns £6OO. \ Comparative figures oj’- income tax are as follows, the present rate given first: A man without dependants on £250 yearly. £lB 15s, £l2 10s; on £350, £3B 10s, £26 ss; on £5OO, £7l 17s, £53 9s; on £BOO, £157 12s. £124 14s; on £1250, £327 12s, £271 3s. A married man with a dependant wife on £250. £3 15s, £2 10s; on £350, £2l, £l5; on £5OO, £5O 6s. £37 10s; on £BOO. £l2B Is. £lOl 6s; on £1250. £2BB 6s, £238 12s. A married man with a wife and two children on £350. £5 ss. £3 15«; on £5OO. £3O, £2l 9s; on £BOO. £9B 10s, £77 19s; on £1250, £249, £206 2s.