PAY AS YOU GO OR AFTER IT'S GONE?

Evening Post, Volume CXXXVI, Issue 147, 18 December 1943, Page 6

PAY AS YOU GO OR AFTER IT'S GONE?

There are obvious advantages about the pay-as-you-go system of collecting income tax and there are also some disadvantages. For the taxpayer the great attraction is that he does not have to.meet in one payment a large sum levied on the previous year's income after most of that income has been spent, o For the State the main advantage is that taxation revenue is spread evenly over the whole year, thus avoiding the necessity for arranging finance against anticipated revenue. The disadvantage's are that the deduction of regular amounts from salaries and wages would serve to cloak the amount that the taxpayer was really contributing to the State and would impose an added burden on employers, who are already acting as collecting agents (unpaid) for the State with other forms of taxation. When taxation is painlessly extracted —that is,' when the money is not handled by the taxpayer—the check which a lump "sum payment might impose on excessive taxation is missing. The, fact that he has- to find ar large amount each year causes the taxpayer to consider the effect high taxation is having on his pocket. The statement which the Minister in charge of the Land and, Income Tax Department (Mr. Nordmeyer) has made in reply to the suggestion Of* the Leader of the Opposition (Mr. Holland) that there should be an inquiry * into the adoption of the system in New Zealand indicates that his Department is already in possession of a great deal of information on the subject. It also makes it clear that at present, there are administrative difficulties in the way of its Mr. Nordmeyer has not, however, suggested that under normal circumstances it would not be possible to put the pay-as-you-go plan into operation. He has agreed that the difficulties he has outlined are not insurmountable;' they' have, in fact, been overcome in other countries. That being so, all possible information about the operation of the plan in other countries should be collected. If the inquiry suggested by Mr. Holland would be helpful to this end, it should receive the Government's consideration. But the man of plain ideas will suggest another inquiry; if taxation is so heavy that it must be extracted under an anaesthetic (and the main argument for pay-as-you-go seems to be that the taxpayer will pay without knowing) would it not be eminently more sensible to seek ways,' at least after the war, of lightening the demand?