TAX CONCESSIONS.

Grey River Argus, 8 September 1945, Page 5

TAX CONCESSIONS.

AUSTRALIAN BUDGET New Social Security Tax HUGE WAR BILL TO MEET. (Rec. 10.10). CANBERRA, Sept. 7. Australia's first post-war budget was presented to Parliament to-day by Hon. J. B. Chifley, Prime Minister and Treasurer. It provides for a reduction of the incoxe tax of 12J per cent, over a full year, the reduction to operate from January 1 next. It provides sales tax concessions amounting to twenty-eight hundred thousand pounds for a full year, and nineteen hundred thousand pounds for the current financial year.

The budget totals 492 million pounds. Of this total revenue will provide 340 millions, and 152 million pounds will come from loans. The taxation will be divided into two sections. One is for normal income tax, and the other for the social services. Exemptions from social services contributions will apply to any taxpayer without dependents who is earning less than £lO4 yearly; to any taxpayer with a wife who is earning less than £156; to any taxpayer with a wife and one child earning less than £175; to a taxpayer with a wife and two children earning less than £211; to one with a wife and three children earning below £257; and to one with a wife and four children earning below £277. The contributions will be graduated, rising to Is 6d in the pound. With the normal income tax, the exemption, for those taxpayers without dependents will be raised from £lO4 to £2OO. No married taxpayer with an income of less than £266 will be called upon to pay any income tax. The new income tax rates will start at threepence in the pound, rising to a maximum of 15s 2d in the pound upon an income in excess of five thousand pounds a year. Including the social services tax the maximum rate will be 16s 8d in the pound. “It is not proposed to reduce the taxation on public companies, but the effect of reducing tax of individual incomes will be to reduce the tax on private comoanies,” said Mr Chifley. “The social’ services contribution is estimated to yield fifty-one million pounds in a full.year, and.income tax eighty-nine millions, making a total of 140 millions. At present taxation yield is 160 million pounds. This means there will be twenty millions of a revenue reduction, but, as the decreases are to operate for only half the present financial year, the decrease this year is expected to be only ten millions. “Out of 492 millions of total expenditure, 360 millions is to go still into the war expenditure, and 132 millions goes into non-war expenditure.”

Mr Chifley said Australia faced an acute shortage of dollars. He added that unless forthcoming discussions in Washington provided a mutually satisfactory solution, Australia’s dollar imports would have to be severely restricted. Australia had outstanding war commitments overseas of about fifty million pounds. It might be necessary to maintain the machinery of exchange control and the licensing, of imports, as a flexible means of keeping the situation .in hand, as Australia’s import requirements were likely to be in excess of her ’ current overseas earnings.

Out of the 360 millions required this year for war expenditure, sixtytwo millions were needed for overseas expenditure. While the rate "of the war expenditure would be greatly reduced by the end of the year, her commitments in the Pacific and the very magnitude of Australia’s war effort meant that the reduction would be only gradual. There would be no reduction in the expenditure for the pay and allowances during the year, in spite of the rapid redu'/.ion in the strength of the forces. On their discharge, the servicemen would receive their deferred pay, also all their undrawn active pay. also their war service leave of fifteen days for each year overseas, and their re-establish-ment leave of thirty days. Their deferred pay alone would probably cost fifty-four millions this year, leaving a liability at June 30, 1946, of approximately thirty millions. Parliament, he said, had also approved of the payment of war gratuities estimated at approximately seventy-five millions. Among other points of the budget are the following:— The six years of war has cost Australia 2,111 thousand pounds. Taxation has provided thirty-four per cent, of this amount.

For the six years ended June 30, 1945, the total expenditure, on all of the services, war and civil, was 2,790 million pounds. The borrowing for war purposes from loans, savings, certificates, etc., amounted to 1,387 million pounds. Australia used the services of 262,000 men and women previously unemployed, and also of 117,000 who would, normally have retired, or have not been seeking employment. The total Australians in work or in the forces rose from 2,700 thousand in 1939, to 3.264 thousand in 1945. At the same time the national income rose from 795 million pounds to 1,256 millions.

Australia provided reciprocal lendlease to America of 258 million pounds. The Government has decided to increase the pensions for widows maintaining a child from 32s 6d to 37s 6d a week. (Rec. 10.30). CANBERRA, Sept. 7. Mr Chifley said that and social services imposed a new and heavy cost on the budget. In 1938-39 the total outlay for social services was seventeen million pounds. It was expected to reach sixty-five millions this year, and seventy-seven million next year. Mr Chifley warned against a runaway rise in prices” because at present" incomes were running in excess of supplies. There was an added danger from the release of the accumulated war-time savings. Mr Chifley, said he anticipated that incomes will remain at a high level during the transition period.. He said that price control must be retained for the present. , SYDNEY, September 7. Under a revised scheme of taxation adopted by the Federal Labour Party, adopted by Caucus a new total ceiling taxation rate of 16s bd in the £1 has been fixed as from January 1. Previously the tax ceiling was 18s 6d. The new rates of tax’ on personal earnings will start at approximately 3d in the £1 on a taxable income of £2Ol and will rise gradually to 15s 2d in the £1 on incomes higher than £5,000. Workers earning £lO2 a year will pay 6d m the £1 social service tax.- On a sliding scale the tax will rise to Is 6d in the £l, but the total liability of any person for this tax will not exceed ci yo? 1 1* The Commonwealth Government’s decision to reduce the income tax by 12J per cent, has been welcomed on every hand, but it is felt that the reduction could have been made to apply immediately. The benefit to the taxpayers of the 125 per cent, cut will be only 65 per cent, over the whole of the‘current year’s income. This is because the cut will not operate until January 1. The contemplated reduc-

tion will result in a loss of revenue of £20,000,000 for the full year. The cost this financial year will be £lO,000,000. . . , The social services tax is expected to create a fund of about £00,000,000 a year, from which all social services will be financed, except the old age and invalid pensions. The fund will be financed, where necessary from 01dinary revenue. This marks an important departure from Governmental policy that social services should not be contributory. It practically follows the New Zealand system, and it will mean that persons earning less than £250 will not pay ordinary taxation, only the social services tax. Tne “Sun’s” Canberra correspondent says: “Mr. Chifley is known to be anxious to make concessions in company taxation principally to attract overseas capital, and the taxation of companies, it is believed, will be proportionately reduced. The sales tax will be reduced to encourage greater production.” While welcoming the tax cut as a tonic for the taxpayer, the Sydney “Morning Merald” thinks the reduction should be effective earlier than January.