TAXED INCOMES

Evening Post, Volume CXXII, Issue 31, 5 August 1936, Page 9

TAXED INCOMES

A WIDEK NET

WITH" SMALLER MESH

CATCHING THE LITTLE FISH

Income and income tax data and comment to April 15 last, as furnished by the Government Statistician, is given in an appendix for the year 1934 to statistics of incomes and income tax for the year 1934-35. It is shown how changes, in .the law and other factors have affected the comparability of statistics for one year with those of another. But those who have the leisure to study the report—and far more people thanever before will now have the interest, whether they want it or no—will find the report both instructive and enlightening.

Those happy years when personal exemption from income tax was an annual income of £300 a year have gone, perhaps for aye. In 1931 this exemption was reduced to £260, and in 1933 to £210. , The net was made bigger and its mesh reduced so as to catch some very little fish, in fact the quite small fry.

■ Many persons not required to furnish returns (remarks the Government Statistician) actually do so. . . . The

net effect of these changes, and of other changes in the law, should be — other things being equal—to increase substantially the aggregate number and amount of incomes covered by the statistics for the 1934-35 tax year as compared with earlier years. The figures for 1934-35, however, not only fail to show an increase, but, particularly in the aggregate amount of income, show a decided fall, and thus furnish eloquent testimony to the severity of the depression. In fact, the fish were not about, or the. bank had been "fished out"—temporarily, at least. The taxable incomes and: tax assessed' are shown: to have fallen away by a very substantial amounts The: total returns for the past, few years are ishown by way of illus-' tratioh as follows:— .■■■'..' - Taxable Tax balances. assessed. £ £ 1928-29 .... 29,535,984 3,166,008 1929-30 .... 32,344,560 3,332,672 1930-31 32,800,131 . 3,949,558 1931-32 .... 31,483,151 4,366,757 1934-35 .... 25,353,397 3,648,599. ■ Although the Government Statistician explains that the figures for the tax year 1934-35 are not properly comparable with those of earlier years, yet one fact emerges, and that is people, of moderate incomes who were in the £300 to £400 a year.group in 1930-31 found themselves in the £200 to £300 group in 1933-34. Put in another way,' returns from individuals with incomes: of £250 a year and over in 1931-32' numbered 92,350, with a gross assessableincome, of £46,650,000; but in 1934-35 these returns dropped to 66,769 in number and assessable income was re-, duced to £33,950,000, a drop of £12,700,000 in assessable income. Company income also fell, but not-nearly, so much as-that of individuals. . TAX-FREE INCOME TAXED. Now companies pay taxation on the; whole of their assessable income, including amounts paid out by way of; dividends to their shareholders; income from." dUyidends^at" present-is-not counted as assessable' iricbriie of : the recipient. Does he escape? He does; not. For instance, if his taxable balance is. £ 300 and he received £ 100 fromi dividends, -then he has to pay on'a taxable balance of £400, although, the, dividends he receives are: not supposed to be taxed ;because they have already been taxed at their source, ! theAcpnipany paying. ; -, . , - -Of "the gross assessable "income of i £53,194,170 derived, from all sources— ;. individuals, companies, and others —the '■'. individual taxpayer had an income of £;28j135,596 for assessment, y What; with various exemptions and one thing or: another, this income; yielded a total tax j of £425,037. Farming individuals had' an assessable income of £3,342,180, but ' they paid iii taxation* £305,187.!' w Assessable income derived from investments by individuals amounted to £7,202,491, and the total tax collected on that was £497,795. , Company assessable income amounted t6 £9,518,369, with no exemptions, and the tax collected amounted to £2,175,069. As already stated, persons with possibly quite small incomes— perhaps below .the exemption level —if such incomes are derived from investments in company shares, indirectly pay income tax for it is presumable that what a company had not to pay in income tax might reasonably be added to its dividends. WAGES AND SALARIES. Wages and salaries is the most prolific source of assessable income-tax, but it also leads in the matter of exemptions. For instance, of a total assessable income in 1934-35, amounting to £28,135,596, derived from salary or wages, the taxable balance, after exemptions had been made, was £5,879,854 and the total tax assessed was £425,037. . - , The assessable income of 1774-com- ' panics was £5,772,178, and the total tax was £1,280,007. The total tax (for 1934-35) amounted to £3,648,599, to which commerce, trade, and business contributed £1,400,244; salaries and wages, £425,037; industry and manufactures, £606,904; farming, £321,461; investments and the like, £566,410. ' The Government Statistician -remarks that of 120,684 individuals covered by the statistics 61,712, with assessable income aggregating £15,625,335 (salary and wage earners with incomes of £250 and over) were not assessed for tax. Of the 58,972 assessed for tax 30,860 or 52 per cent., with incomes aggregating £8,699,357 (31J per cent.), were assessed for under £5 of tax.

At the other end of the scale 114 individuals were each.assessed for over £ 1000 of tax and their average assessment was £1657. Even among the companies 1307 of them, or 34 per cent, had an assessment of under £5. The aggregate income of these 1307 companies was only £67,528, or under 1 per cent, of the assessable income for all companies: ■ -

Companies assessed for over £1000 of tax numbered 259, or under 7 per cent, of the total. Their aggregate assessable income was £7,384,829, or 77£ per cent, of the total of their class, and .their aggregate tax assessment was £1,939,096, or 89 per cent, of the company tax. Some fifty-one companies, with a total assessable jncome of £4,698,893, were each assessed for "over £10,000 of tax, an aggregate of £1,225,091, which constituted 56 per cent, of company tax and 334 per cent, of the total tax assessed for all classes of taxpayers.