TAX LAG ARGUMENT

Dominion, Volume 37, Issue 116, 11 February 1944, Page 5

TAX LAG ARGUMENT

Pay-As-You-Earn System For Australia (By Telegraph.—Press Assn.— Copyright.) (Special Australian Correspondent.) (Received February 10, 7 p.m.) SYDNEY, February 10. The early introduction of pay-as-you-earn taxation is believed to have been recommended by a special Federal Parliamentary committee which has been investigating the problem. The necessary legislation niay be brought down during the present session of Parliament. ■ It is understood that the scheme suggested will not wipe out the alleged present full year’s tax lag, but only three-, quarters of this amount. If the committee’s recommendation is adopted Australian taxpayers will have to pay 25 per cent, of one year’s tax in instalments spread equally over three years. This means that the Australian income tax rates would be 8i per cent, higher than at present for the next three years. The committee's report, which is to be tabled in Parliament soon, is believed to be a compromise between the views of its Government and Opposition members. The Opposition members claim there is no tax lag at present. _ The Government members clam that introduction of pay-as-you-earn would cause the loss of one year’s taxation revenue. The suggested, new scheme would apply only to incomes earned by personal exertion, and the present system of tax payments would apply to all other Australian incomes. ♦

Strong opposition is being expressed to the suggestion that the Government should forgo only 75 per cent, of the year's “mythical” tax lag. The president of the New South Wales Taxpayers’ Association. Mr. McKellar White, commented: “The suggestion that the taxpayers should be burdened with 8| per cent, extra taxation for three years to pay off a mythical debt is barefaced roboery, and is nothing less than a brazen attempt to raise more revenue.” The president of the Constitutional Association of New South Wales, Dr. Frank Louat, said: “If the Government can see its way clear to forgo 75 per event, of a thdbretical lag, why can’t the full ICO per cent, be forgotten? . If 8J per cent, is added to the taxation for three years the real basis will not be to make up any lag but to increase taxation.” Pay-as-you-earn taxation was introduced in Canada and the United States last year, and it will begin in Britain from April 5. The original British plan applied pay-as-you-earn only to those whose weekly wage or salary was up to £OOO a year, but last week the plan was extended to apply to all wageearners.