TREBLING INCOME TAX

Evening Post, Volume CXI, Issue 68, 21 March 1931, Page 8

TREBLING INCOME TAX

A Labour member of Parliament on Thursday night expressed the opinion that income tax payers were due for an increase. Whether due or not, an increase was made last year, and there will probably be another this year. Last year it was not a small addition—lo per cent, of the tax payable; but Labour would not slop at that. The Labour Party's proposal is that income lax should supply some £2,600,000 additional. This figure is arrived at by proposing a 10 per cent, tax on individual incomes above £500. For 1929-30 such assessable incomes totalled £26,000,000, and 10 per cent, would, of course, be £2,600,000. But Labour's first mistake is in basing the calculation on assessable incomes. Tax is levied on taxable balances, and for incomes over £500 exemptions of some £7,500,000 were allowed in 1929-30, so that the taxable balance was about £18,500,000. To obtain £2,600,000 on this taxable balance would need a tax of 14 per cent, instead of the 10 per cent, proposed. In 1929-30 the average tax levied per pound of taxable balance was Is 2d. As a 10 per cent, addition was made last year, the average for 1930-31 will be about Is 3^d, or 6i per' cent., and Labour's proposal would make it 4s Id in the £, or 20.5 per cent. It must be clearly borne in mind that what Labour so glibly proposes is not 10 per cent, addition to the lax, such as was made last year, but 10 per cent, of the assessable income, equal lo 14 per cent, of the taxable income. The Government's impost was a 10 per cent, increase. Labour's levy would be an increase of about 250 per cent. Individual incomes in 1929-30 yielded £1,207,322 in taxation. Labour requires, then, to furnish a further £2,600,000, or a total of £3,800,----000. If we take about £200,000 of the 1929-30 lax as being paid by persons with incomes under £500, this means that Labour would extract from the individuals receiving over £500 some £3,600,000 instead of the £1,000,000 they paid formerly. Their tax would be multiplied three and a half times. This estimate, further, is based on the assumption that taxable incomes will be as great this year as in 1929-30, which is most improbable. If Labour considers a 250 per cent, addition to individual income taxation moderate, it is evident that Labour would not regard as excessive any levy which left any considerable part of the income for the taxpayer. We pointed out some lime ago that a professional man with an income of £1000 a year had to work a month lo pay his direct and indirect taxation. Labour would save 10 per cent, of the salaries of those who work for the Government, and are paid for it, by creating a new class —comprising ihosc who work for the Government for three months in the year and arc not paid for it.