TAXATION SYSTEM CRITICIZED

Dominion, Volume 37, Issue 128, 25 February 1944, Page 4

TAXATION SYSTEM CRITICIZED

Overhaul Urged PENALTY ON “UNEARNED” INCOME “While 3’o drastic alteration in the basis of our taxation can be contemplated during the war, I believe that a complete overhaul of our whole system is overdue,” said the retiring president of the New Zealand Society of Accountants Mr W. B. Griftin (Nelson) at the annual meeting of the society in Wellington this week. The Associated Chambers of Commerce had recommended a Royal Commission to investigate taxation aud its incidence. He felt that this subject would well repay deep study by accountants’ branches. Accountants had a wider experience of the operation of tax laws thap any other section of the community and their opinions should carry weight as in this matte,r they were much less open to the suspicion of self-interest'than many other sections. He knew there were wide differences of opinion on the subject and did not wish unduly to stress his own opinions, but he considered the most vital question was whether the present system of company taxation should continue. If ability to pay was the principle to be observed in imposing income tax he felt it could only be observed if taxation was traced as fully as possible to the individual. Companies must bear sofne tax, but ■ he thought the burden would be much more fairly spread if company tax were at a very moderate level and an adjustment were made to the recipient of dividends according to his other income. “Collecting Agencies.” “Unfortunately our system has an almost irresistible attraction for the politician,” said Mr. Griffin. “Our companies ore multiple tax collecting agencies for the. Government and in that role play a very' useful part in a taxing system which, throughout, seems to be based rather on expediency than on principle.

“One of the most glaring injustices is the violent attack on what is called ‘unearned income.’ The very term is an affront to people who through thrift during their working years have attempted to accumulate and invest enough capital to keep them in independence during their later years. As though the 33 1-3 per cent, import were not a sufficient penalty oh thrift ‘unearned income’ is hit again where the taxpayer has other income, through the ingeniously ‘simple’ method of assessment introduced by the Finance Act, 1942. Ability to pay is no greater because income derives from investment instead of froin business profits or salary, and I see no moral justification for this discrimination. It would be a partial relief and particularly welcome to taxpayers with only moderate incomes if an exemption of say £5OO or £6OO were allowed before the application of the 33 1-3 per cent, impost. “The method of assessment introduced by the Finance Aet, 1942, is most’ objectionable and should'be abandoned. Its effect is to raise taxation to certain classes of taxpayers, mainly recipients of non-assessable income, while others are Itfe untouched. It is most disturbing that expediency should be placed before principle in this way and that the injustice resulting from the method should be disregarded in so cynical a“ fashion.”