TAX PAYMENTS

Evening Star, Issue 21091, 2 May 1932, Page 6

TAX PAYMENTS

INSTALMENT CONCESSION VALUABLE ANALYSIS OF SITUATION (From Our Parliamentary Reporter.] WELLINGTON May 2. The announcement of Mr Forbes that provision will bo made in the Finance Bill this week for the payment of income tax on an instalment basis will be almost as welcome as the decision of the Government merely to reimpose the existing rates of taxation for this year. For some time business interests nave represented to the Government the desirability of following the practice adopted m Great Britain, where payments are allowed to be spread oyer reasonable periods after the first instalment of the tax has been paid. More than once it has been pointed out that firms Carrying largo stocks and obtaining their revenue on what is tantamount to an instalment basis, were entitled to the same consideration from the Government as they extended to their clients, in order that lump sum payments of a substantial nature could be avoided at the difficult time of the year. ... The general plan of distributing payments more comfortably will be assisted by the earlier issue of the assessments, and Mr Forbes has this in mind in presenting the annual Taxing ..Bill this session, instead of delaying its introduction until the main session. Although it is unlikely that’the passage of the Bill will be unduly delayed, the ramifications of taxation usually find ready debaters in the House. Labour can be expected to renew its demand for steeper, graduations on higher incomes. and other members may have something to say about the reimposijtioh of last year’s emergency charges. ! The returns of income for the last financial year are not yet available, and the department, which has been obliged to frame its proposals on an approximate estimate only is apparently satisfied that the re-enactment of the increased rates levied last year will be sufficient to meet the position. There is no doubt, however, that the taxation yield this year will fall short by a substantial figure of the amount 1 which last year found its way into the tax collector’s bag. The tentative official estimate fixes the decrease at £900,000. In addition to the reduced earning power of the average taypayer, it must be remembered that wages tax payments are deductible by way of special exemption from assessable income for taxation purposes. If the department has not made allowance for that position the falling off of the net yield is likely to approximate a million. . . It had been generally anticipated that an increase in the_ rate and the deliberalising of exemptions would be enforced to make up the leeway, but Mr Stewart has announced a. breathing space from further inroads in the meantime, and the existing rates will be reimposed for the current year. These are set out in detail in the schedule to the Land and Income Tax Annual Act, 1931, but the case of the average earned income may be briefly outlined. If the taxable, income exceeds £3OO, the rate is ,7d for every pound thereof, increased by one onehundredth of a penny for every pound in excess up to £1,500. In addition, there are four emergency charges which remain. These are a 30 per cent, surtax (previously 10 per cent.), a 33 1-3 per cent, surtax on unearned income, a flat rate tax of 4d in the pound on incomes over £SOO, and the elimination of the 10 per cent, deduction on earned incomes. The “statutory ” exemption remains at £260 to last year it was £3oo— at the rate of £1 for every £3 of excess up to £560, and further diminished by £1 for every £1 10s of excess over £560, and leaving no exemption at £BOO.