Mr Watts’s View Of Labour P.A.Y.E. Plan

Press, Volume XCV, Issue 28231, 20 March 1957, Page 14

Mr Watts’s View Of Labour P.A.Y.E. Plan

(New Zealand Press Association/

WELLINGTON, March 19.

The Minister of Finance (Mr J. T. Watts) said today that the pay-as-you-earn income tax scheme recently announced by the Leader of the Opposition (Mr Nash) differed from that put forward by Labour in 1954. “We all know Mr Nash’s record as a tax gatherer, and I would warn all taxpayers to beware of his proposals,” said the Minister. “He apparently plans to use P.A.Y.E. as a device for collecting virtually the entire incomes of some taxpayers during one income year.” Mr Watts said that the Government’s own plans for a P.A.Y.E. scheme were now before a committee, and he would be glad to give further details when the committee’s report had been considered by the Government. “I am not going to anticipate what the report will recommend, but I am quite certain that the Government’s scheme could hot be as unfair and unpractical as the one outlined by the Leader of the Opposition,” he said.

Mr Nash’s Scheme Dealing with the scheme outlined by Mr Nash, Mr Watts said: “As Mr Nash is reported to have said, his remission of tax for what he calls the ‘in between’ year is not new, but his recent announcement is not the same scheme as he put forward in 1954. “In 1954 his proposal—the Labour proposal—was to start his scheme on April 2, 1956, and his scheme clearly included forgiveness of up to £lOO of income tax payable in March, 1956, on income derived during the year ended March 31, 1955. “Translating these dates forward from the present time, Mr Nash’s scheme in 1954 would have been to start his scheme on April 2, 1958, and to forgive up to £lOO of tax payable in March, 1958, on income derived during the year ended March 31, 1957. “Now Mr Nash has changed his rebate year. His latest idea is to remit or rebate up to £lOO in respect of the payment to be made in March, 1959, not 1958, as his 1954 scheme would have envisaged,” said Mr Watts. “Why has Mr Nash changed the rebate year? Is it because he now realises that the proposal put to the electors in 1954 was quite inequitable and could not have been carried out? I challenge Mr Nash to demonstrate that the scheme he now announces is exactly the same as in his 1954 policy.” Tax Liability Mr Watts said that Mr Nash would have income tax liability as follows:

On income of the year ended March 31, 1957, the tax payable in March, 1958, would be payable in full without any rebate. On income of the year ended March 31, 1958, the tax payable in March. 1959, would be rebated up to £lOO only. On income of the year commending April 1, 1958, and thereafter. Mr Nash would have a P.A.Y.E. collection. “So far as one can gather from reported statements, *for those income tax liability is under £lOO, Mr Nash would do this: “(1) He would require them to pay in March, 1958, full income tax on their income derived during the year ended March 31. 1957. “(2) He would operate a P.A.Y.E. scheme as from April 1, 1958. “(3) The income of the year ended March 31, 1958, would not be liable to income tax. Effect On Taxpayers “For those whose income tax liability is more than £lOO, Mr Nash would: “(a) Require them to pay in March, 1958, full income tax on their income derived during the year ended March 31,. 1957. “(b) Operate a P.A.Y.E. scheme as from April 1, 1958.

“(c) Require them to pay in March, 1959, 11 months after commencing P.A.Y.E. deduction on cui*rent income, their income tax assessment on income of the year ended March 31, 1958, subject to a rebate of £lOO. “That is what would be involved for 85,000 individual taxpayers who pay more than £lOO income tax annually.” Mr Watts said that there were about 500 taxpayers who paid income tax and social security charge at about 10s in the £ on their income.

They, would, under Mr Nash’s scheme, pay away half of the previous year’s income in March, 1958, have half of their income deducted under P.A.Y.E. as from April 1, 1958, and apply the remaining half of that year’s income to the tax due in March, 1959. “In other words, the rebate of £lOO and the untaxed special exemptions are all that these taxpayers would have to live on out of their income for a whole year. “Obviously Mr Nash’s scheme would force such people to withdraw their capital in order to live,” added the Minister.

“Mr Nash’s scheme in 1954 did not elaborate on any remission in respect of social security charge payable by individuals on income other than salary or wages, whose basis of social security payment is the same as for income tax. “Neither does he say if P.A.Y.E. would be applied to companies. There are a number of other points about P.A.Y.E. which he has never announced and I am keen to hear further details at such time as Mr Nash chooses to release them,” said Mr Watts.

NO COMMENT BY MR NASH

Minister’s Policy Wanted

The Leader of the Opposition (Mr Nash) twice declined in Christchurch to reply to the statement made by the Minister of Finance (Mr J. T. Watts) about Labour policy on P.A.Y.E. taxation.

Questioned by reporters before his meeting last evening, Mr Nash said: “Don’t you think it’s about time Mr Watts told us something of his plans rather than criticise mine?” He added that he would reply in his own time. During his address an hour later at Upper Riccarton, Mr Nash said: “I don’t intend to speak about P.A.Y.E. taxation tonight. I want Mr Watts to tell me what is in his rriind. What’s he jacking up?” Mr Nash asked, amid appreciative laughter.