SUPERTAX TO BE ABOLISHED

Press, Volume LXXXVI, Issue 26124, 29 May 1950, Page 6

SUPERTAX TO BE ABOLISHED

Statement By Mr

Holland

EFFECT ON WORKS LOAN

From Our Own Reporter WELLINGTON. May 28.

The 33 1-3 per cent, penal tax on unearned incomes is to be abolished. Further details will be given when the Budget is presented to Parliament. This was announced by the Prime Minister <Mr Holland) in a national broadcast last night. “For many years now. people have been asked to save, and. of course, it was in their own interests to do so.” said Mr Holland. “Then what I consider a most unjust tax—a supertax on so-called unearned income—was levied on the return received from savings by charging 33 1-3 per cent, higher tax on that income than on other forms of income. “It does not make sense to ask people to save, and then apply a 33 1-3 per cent, penalty for doing so. Oddly enough, this penalty only applies to individual taxpayers and not to companies. “I shall have more to say on that subject when the Budget is presented to Parliament. However, in view of the importance of this matter to the national development loan. I am happy to be able to announce that the Government has decided to abolish this tax—this injustice to thrifty people—this 33 1-3 per cent, penal tax on incomes from savings. “This decision will considerably increase the attractiveness of this loan to that class of investor, without disturbing the well-established basic rate of interest.” The Finance Act, 1942, provided for this new method of assessing income tax by separatingearned and unearned income. The Land and Income Tax (annual) Act, 1947, granted some measure of relief from the 33 1-3 per cent, surcharge in cases of persons on small incomes. Where the unearned taxable income, or the total of unearned and earned taxable income did not exceed £2OO. it was subject to earned rates of tax only. Where it exceeded £2OO but was less than £4OO. the amount nf unearned income to be treated at earned rates was not to be greater than the difference betwen the taxable income and £4OO. The 1948 annual act repeated this provision. [For details of the National Development Loan announced by Mr Holland, see page 8. J