UNJUST POSITION

Hauraki Plains Gazette, Volume 52, Issue 3250, 9 April 1943, Page 3

UNJUST POSITION

NON-ASSESSABLE INCOME LIABILITIES INCREASED METHOD OF ASSESSMENT There can be no justice in a principle of taxation which singles out certain persons for a penal tax well above that being paid by other persons with a similar income (says a statement by the Associated Ghambeis of Commerce of New Zealand). This is what is done by the provisions of Section 5 of the Finance Act, 1942, which alters the basis of computation of the amount of income-tax payable by taxpayers who derive both assessable and non-assessable income.

Apart from the fact that the nonassessable income involved (insofar as it represents company dividends) will, in most eases, already have been subjected to the maximum rates of company taxation (14/0 2-3 d in the £), the incidence of the new method of assessment is illogical, . and certainly does not fit in with the Government’s contention that those who receive nonassessable income are better able to bear the weight of additional taxation. Capacity To Pay

On the other hand, however, the liability of those persons whose income is wholly non-assessable has not been in any way affected, notwithstanding that the amount of their income—and therefore their capacity to pay —is the same as that of the taxpayers whose liability has been substantially in-

creased. But the vital consideration is that the non-assessable income in question has already been subjected to its full Measure of taxation in the hands of ttye companies concerned —in

most cases tat maximum rates —and it is entirely wrong in principle that such income should again be subjected to taxation in the hands of sharehold-

ers. If the shareholder is to be taxed then the cpmpany should be exempted, or if the company is to be taxed then the shareholder should be exempted. The revenue should not, however, seek

to apply the rule both ways. There is no argument that can be ’put-forward in justification of the dif-

ferentiation that is made by the present taxation provisions between different .people. It is not to be denied that war conditions require heavy taxation, but there is a world of difference between (1) the weight of taxation, and (2) its incidence. What is of national concern is that the incidence of taxation, even when the

weight of it has to be heavy, should be as equitable as possible, and should not discourage individual effort and national production.

Crippling Business The new basis of taxation has a crippling effect on business people in particular. The bulk of these are men who are experienced in trade, and whose services are valuable. Men retired from active business and <vho recommence activities solely on account of the war, will be taxed up to 18/X in the &, so that a man earning £2OOO is left with £2OO, which is not much more than the allowance under the Social Security scheme to people who are unable to work at all. Not Understood It seems clear that the full effect of the altered basis of assessment was not ...fully understood by members of Parliament when the Act was passed by the Legislature last year. A number of them have since expressed their

surprise at the effect of the legislalation, and many representations have been made to the Associated Chambers by taxpayers who are only now realising the implications of this highly complex provision in last year’s Finance Act. It is hoped that the interval between the adjournment of Parliament and its resumption in May will be utilised by the Government in framing legislative amendments to ad-

just the unjust position that has been outlined.