STATE WAGE BILL

Evening Star, Issue 21078, 15 April 1932, Page 3

STATE WAGE BILL

- INCIDENCE OF SALARY GUTS 10 PER PENT. CLASS IN MAJORITY IFrou Ouu Pauliamextarv Reporter.] WELLINGTON, April 14. When the first reduction in the Public Service salaries was imposed in 1931, operating from April 1, it was on the basis of a fiat rate of 10 per cent. The Government declined on that occasion to operate a graduated system, and this attitude was also taken during recent weeks by the National Expenditure Commission, which recommended another 10 per cent, cut in preference to graduation, on tho ground that the latter principle involmed many_ anomalies and that, moreover, graduation was already substantially provided for by the income tax. The legislation now being considered by the House provides, however, for the adoption of a graduated scale of reduction, salaries up to £225 bearing a cut of 5 per cent., those from £225 to £720 10 per cent., .and above this point 12J per cent. No official estimates have yet been given of the probable results of the reduction on tho basis of the scale adopted, though the National Expenditure Commission suggested that a flat rate of 10 per cent, would save £024,000. The Minister of Finance has so far confined his estimate of the savings to a figure which includes both salary and pensions reductions, which will aggregate £1,100,000. However, some important information as to the distribution of tho various classes of salaries was given last year by the Prime Minister, and from these figures the incidence of the graduated cuts can be approximately shown. Tho salaries of the Public Sendee are spaced as follow: Annual expenditure over £I,OOO, £74,222. From £5Ol to £I,OOO, £1,117,227. From £2Ol to £SOO, £9,119,000. Up to £2OO, £1,389,000. This scale does not exactly coincide with the Government graduations, but it shows clearly that quite nine millions of salary will come under the 10 per cent, cut, that the 5 per cent, rate is hardly likely to cover more than one and a-half millions, and that the highest rate of the cut will affect only a small proportion of tho Public Service, which will also be subject to income tax on a fairly heavy scale. Assuming that last year’s income tax rates are not increased, the effect on salaries will be as follows: Income tax on £3OO, £2 0s 2d. £SOO, £l2 9s 7d. £7OO, £3B 14s 4d. £I,OOO, £B4 3s 4d. In connection with the previous reduction in salaries the Treasury reported that graduation which exempted those under £2OO and placed a 5 per cent, cut on salaries up to £SOO, with 10 per cent, between £SOO and £I,OOO and 20 per cent, over £I,OOO would produce £688,000; but the Government wanted £1,300,000, and adopted an allround 10 per cent, reduction..