TAX RELIEF URGED

Gisborne Herald, Volume LXXIII, Issue 21963, 6 March 1946, Page 6

TAX RELIEF URGED

MANY ANOMALIES

SYSTEM TOO INVOLVED

SIMPLER CODE NEEDED

Land and income tax was one of the main subjects covered by Mr. D. H. Steen, Auckland, in his presidential address at the annual meeting of the New Zealand Society of Accountants.

“In their interpretation or the accepted principle that taxation should be borne by those most able to bear it.” he said, “successive Governments in their ever-increasing need for revenue have displayed a tax-gathering ingenuity that is increasingly deviating from principles of true equity. “Indeed, in imposing the surcharge on unearned income—-first done to meet an emergency in 1932—the then Government departed entirely from that principle and I think the 33 1-3 per cent surcharge or unearned income is an unwarranted and unjust imposition that should be removed Deterrent To Investment “It bears most heavily in many cases on those least able to bear it and is an undoubted deterrent to investment in mortgage security or housing property. In this it is doing the country a singular disservice. The taxing ol annuities, which include a return of both capital and income, and then at unearned rates, .too, is surely an injustice. and in the one case amounts to capital levy.

“With the cessation of hostilities and the consequent reduction in war expenses. the taxpayer is entitled to look to much-needed relief. I have yet to find that the economic law of diminishing returns is false, and it applies in taxation as in many other fields. The Minister himself has. at least by inference, admitted that high .taxation throws a strain on honesty. More than that, it encourages extravagance in industry. How much needless expense is being embarked upon because the taxpayer fondly imagines that the Treasury is bearing most of the cost? I.t were better that rates of taxation were lower and such extravagances curbed, and I doubt whether the net return from taxation would suffer. “Successive presidents of the society have pointed out the harsh operation of the graduated company tax and the anomalies that arise in the case of companies whose incomes range from £5500 to £3OOO. The amount taken n taxation by reason of increasing income jn that range is such as to be, to say the least of it, discouraging. The introduction of a step system for companies would relieve the anomaly. Method Condemned “In the field of personal .taxation I feel that the present method of treatment of non-asscssable, earned, and unearned income, condemns itself. In the first place, the using of nonassessable income, which has already borne tax, to lift assessable income into a higher scale with taxation at high levels, must cause many of the able citizens not to use their, capacity when their earned income is so severely taxed.

Surely in the days that will follow all the capacity of all the people will be needed. I have already commented upon the impositions levied on unearned income —but .this further singling out and placing it in . the highest tax-paying scale is a further discrimination which, under principles of equity, is not warranted.

“In general, the position regarding taxation in this country has become so involved that a re-enactment of a more simple code is urgently needed. In the framing of that code I hope the Government will seek the assistance oi competent outsiders who might assist departmental officers to arrive at a more equitable code of taxation.’*