Lower incomes fairly taxed, P.M. believes

Press, 12 June 1984, Page 16

Lower incomes fairly taxed, P.M. believes

PA Auckland The Government had done endless computer runs to ensure that those on lower incomes were taxed fairly, said the Prime Minister, Sir Robert Muldoon. Last year, adjustments to the extent of $6O million were made in favour of lower-incomes people, he said, but it was not possible to bring in a standard flat rate. Sir Robert told the Auckland Regional Chamber of Commerce that for many years it had been argued that a steeply progressive rate of personal income tax deterred effort and reduced productivity. It had also been argued, he said, that a flat rate of tax, which meant that a man could work more and earn more without going

into a high tax bracket, would increase productivity and output. “I believe that the move may well have assisted the Government in the opinion polls, but I have not seen evidence that people are working harder,” said Sir Robert. Nevertheless, he believed the move setting the maximum personal income tax rate at 31 per cent was worth making, even though the cost of $lOOO million last year was the principal reason for the increase in the internal deficit. “Again, I have not had anyone tell me that we should go back to the old personal income tax scale in order to reduce the internal deficit,” he said. This was coming down, anyway, he said, as the Budget would show.