Income Tax To Be Cut By £29,000,000 In Australia

Gisborne Herald, Volume LXXV, Issue 22731, 1 September 1948, Page 5

Income Tax To Be Cut By £29,000,000 In Australia

k (N.Z.F. A.—Reuter—Copyright.)

CANBERRA, August 31. Income tax cuts totalling about £29,000,000 and ranging from 33 per cent on low incomes to three per cent on high have been approved by the Federal Parliamentary Labour Party.

It is expected that the cuts will operate either from July 1 last or from October 1, but that reduced weekly tax deductions from wages will not begin until January. Income tax cuts form part of the Budget concessions totalling £60,000,000 which were approved by a caucus on the recommendation of the Prime Minister. Mr. J. B. Chifley. Other main concessions are:— 1. A reduction of indirect taxation by £ 10.000,000. 2. An increase of ns a week in pen-

sions. 3. An increase of 2s Gd a week in child endowment, making the new rate 10s a week payable on all children except the first. 4. An increase of 2s in hospital benefits under the Federal and State free hospital scheme, making the new rate 8s a bed. 5. Free medical treatment in repatriation hospitals for war widows and the wives of war pensioners. 6. Liberalisation of the means test to allow an increase in permissable income from £1 to 30s a week and £3 a week for a married couple. 7. Raising of the property qualification figure from £650 to £750.

Fivefold Pre-war Expenditure In presenting his proposals, to the caucus, Mr. Chifley said that the future Commonwealth expenditure would be at least five times the pre-war expenditure and that propaganda concerning taxation was doing more harm than taxation itself was doing. The idea had been spreading that every shortage and hold-up of industry would vanish if only taxation rates were reduced. Proof that the Government policy had been sound was in the present state of the economy. Clearly, the Government policy had not checked employment which was everywhere at the maximum“To cut taxes right and left would have been popular,’’ he added, “and the increasing of borrowing. Lack of revenue would have blocked many new and valuable services. Pensions and other benefits could not have been increased. Risk of Disastrous Collapse “There would have been an inflationary boom leading, probably, to a disastrous collapse and unemployment.” The Australian economy had been stabilised and expanded until, for general soundness and future promise, it com oared favourably with any in the world. Large surpluses were not being put away in the Government accounts. The Budget would be balanced this year and proper provision would also be made, as required by law, for social service payments and similar expenditure. “The temporary wartime expenditure for which borrowing Was justifiable had been giving way to peacetime expenditures for which revenues was the only sound means of finance.” Mr. Chifley gave five pointers to the larger Commonwealth expenditure as follows: 1. Heavy rehabilitation and repatriation costs would continue for years. 2. War debt charges were approaching £50,000.000 yearly. 3. Post-war defence costing £60,000,000 to £70,000.000 yearly compared with less than £10,000,000 before the war. 40 Social services had already passed £70,000,000 yearly, against a pre-war figure of less than £20,000,000 and would continue to increase. 5. Costs in general had increased greatly. On the new income tax scale, a man with a dependent wife and two children will save £3 9s yearly if he earns £4OO, £8 11s if he earns £SOO and £lO 7s if he earns £6OO.

Comparative tables of income tax are as follows: —

Man With Dependents

Income Present Rate New Scale £ £ s. £ s. 250 .... 18 15 12 10 350 .... 38 10 26 5 500 .... 71 17 53 9 800 .... 157 12 124 14 1250 .... 327 12 271 3 Married Man With Dependent Wife 250 3 15 2 10 350 .... 21 0 15 0 500 .... 50 6 37 10 800 .... 128 1 101 6 1250 .... 288 6 238 12 Married Man With Wife and Two 350 Children 5 5 3 15 500 .... 30 0 21 9 800 .... 98 10 77 19 1250 .... 249 0 206 2