CASE FOR EXPERTS

Greymouth Evening Star, 11 May 1936, Page 10

CASE FOR EXPERTS

INCOME TAX COMPLICATIONS. At the present tim?, only an expert can work out one’s Income tax, and even the experts cannot always agree (says a statement by the Associated Chambers of Commerce of New Zealand) A simplification of the band, and Income Tax Act, eliminating the existing anomalies, would be a timely move. The situation seems to call lor a complete re-enactment of the Act, embodying in the Statute the 1923 Act and the many amendments which appear with almost unfailing regularity at each session of Parliament. The ground has been to some extent cleared by the 1932 reprint of statutes, but a recodification would substantially improve the clarity of some of the provisions. The revision could well remove anomalies and provisions which are vexatious and a hindrance to trade, without even the justification of their providing important additions to the taxation revenue. For instance, (a) there is the liability of farming incomes dependent, not on the volume of income, but on the value of land used, and also, in some instances, on the form of tenure; (b) certain farming profits assessable or non-assessable according to whether an “intensive” system is in operation; (c) inadequate allowances for depreciation of improvements on leasehold premises the cost of which, in practice, is equivalent to extra rent.

Vexatious and sometimes unjust provisions are instanced; (d) Taxation of non-resident traders; (e) assessment of land subdivision profits on the making of the sale (so often not completed) rather than at the time of the completion of the transaction by the purchaser. Income tax as levied in New Zealand cannot be looked bn rightly as income tax, but mainly as a tax on the profits of companies, plus tax on personal income other than from companies’ dividends-— although individuals' incomes from dividends are taken into account in deciding the rate at which the individual pays the tax. With a view to simplification, the Government could well adopt the system of levying this ‘tax on personal incomes, leaving only undisturbed profits of companies subject to taxation as against the companies themselves.

FINDINGS OF COMMISSION. The present, system of levying on companies is unequal and inequitable in its incidence, as an investor of small means in a large, company pays on his dividend the same rate' as a more wealthy investor. The heavy taxation levied is a distinct handicap to the proper development of industry. This is fully supported by the Now Zealand Royal Commission on Taxation of 1924/ which arrived at findings to the following effect: — (1) That the ideal graduated income tak is a tax upon the income from a'll sources of each individual, and that the fiscal policy of the Dominion should be shaped so as to secure the abolition as soon as reasonably practicable of the present system of company taxation, except the undivided profits of companies. (2) That the weight of evidence is against land tax and in favour of abandoning it and substituting he graduated income tax. CD That State and public body trading and public utility concerns should be taxed. In addition, there is the awkwardness and cumbrousness of the existing income tax. witii its complicated scale of graduation, its exrescences of surtax, special emergency taxes, special flat rate taxes, and what not. While the distinction between earned and unearned incomes should perhaps be preserved, all this paraphernalia could bo swept away, and a single basicrate on a simple formula substituted. A committee of the Associated Chambers of Commerce of New Zealand is working on th-e 1924 Taxation Commission’s report, with a view to making such recommendations to Government as are calculated to bring about a more equitable incidence of income tax.