BUDGET MAKES LITTLE CHANGE TO TAXATION

Press, Volume CVI, Issue 31088, 17 June 1966, Page 1

BUDGET MAKES LITTLE CHANGE TO TAXATION

Doubts On Exports Restrict Action

(From Our Parliamentary Reporter)

WELLINGTON, June 16. Because of uncertainties in export markets, difficulty in raising external capital and a heavy increase in defence expenditure, there could be no major taxation adjustments this year, although the Government had intended to make some significant changes in the tax structure, said the Minister of Finance (Mr Lake) when he presented the Budget to Parliament this evening.

Only minor taxation adjustments are made. They include: A deduction from taxable income for subscriptions and levies paid by wage or salary earners which relate directly to their employment, including trade union fees and subscriptions to professional bodies. This deduction will be subject to a limit of £lO. The present limit of 20 per cent of a taxpayer’s assessable income for exemption for life insurance premiums and superannuation contributions is abolished. The range of life insurance policies qualifying for exemption is extended to include eligible policies on the lives of a taxpayer’s wife and children. A special exemption of £7B to relieve hardship will be allowed separated and divorced persons with dependent children who are not entitled to claim the housekeeper exemption.

Other features are: The 10 per cent rebate for income tax, with a limit of £lOO, will be continued for another year. Taxation incentives given last year on depreciation, farm development expenditure and export market and tourist promotion expenditure are continued.

Present arrangements allowing companies to claim as a deduction donations made to universities for research are being extended.

To encourage savings the interest rate on investment accounts is increased. In his review of economic policy, Mr Lake said the substantial increase in output and productive capacity had been accompanied by a rapid rise in national expenditure. “This and the check to the rate of increase in our export earnings has imposed a severe strain on our overseas reserves,” he said. The Government last year had decided on a policy of gradual restraint combined with a willingness to borrow overseas to sustain a vigorous growth of economic development. In spite of short-term balance of payments difficulties, its aim had been to avoid drastic restrictive measures that would have had an adverse impact on longerterm plans for essential capital development. “Although more extensive overseas borrowing to sustain our investment programme could be justified, we are faced with increasingly difficult terms and conditions in the capital markets upon which we have been able to rely in the past,” the Minister said. “The Government has, therefore, accepted the need in the year ahead to plan for a somewhat slower rate of

growth than we have been able to achieve in recent years. Such a course is essential to reduce the pressure on domestic resources and to protect our external position.”