INCOME TAX REFORMS.

Lyttelton Times, Volume CXVIII, Issue 18412, 19 May 1920, Page 6

INCOME TAX REFORMS.

The Royal Commission on Income Tax, appointed in-Britain several months ago to consider the whole question of incofho tax incidence, presented its report in the middlo of March last, and made a number of recommendations in tha direction of apportioning more equitably tho burden of taxation and simplifying the task of the tax-collector. It is not an easy task to summarise the scheme advocated by the Commission, which occupied 200 closely printed fookcap pages, but it is possible to indicate tho salient features of the proposals, especially those which dealwit!h phases of the problem with which we are familiar in this country. In the first place tho limit of exemption has been rase.i from £l3O all round to £l5O in the case of earned and £135 in the case of unearned incomes. In the case of a married man an exemption is allowed up to £250 of earned and £225 of unearned income. There is an additional allowance of £4O for one child under sixteen, £7O for two and £IOO for three, these amounts being diminished by one-tenth when unearned income is being dealt with. An allowance is also made in cases where the taxpayer supports a widowed mother. The standard rato of income tax is to be 6s in the £, but where the " taxablo income" — the residue after deducting all allowances—does not exceed £225, half the standard rato, or 3s in the £ is charged. This provision regarding standard rate and half rate is designed to replace a sliding scale ranging from 6s to 2s Sd in the £ applying to incomes under £2500 per annum. A praotical illustration of the working of the new proposals, as compared with the New Zealand system, will, perhaps, illustrate tho intention of the former. Under the New Zealand system a bachelor earning £3OO per annum escapes scot-free, whore in Britain, under the new proposals, he would pay £22 10s- A married man with a wife and three children earning £350 per annum in Britain would be free of taxation, whereas in New Zealand he now pays war tax on £SO, or £1 17s 6d. Further comparisons, with higher incomes, would not serve to illustrate the principle, as the rate of taxation in Britain, on'even small incomes, is moro than double that in force in Now Zealand. The importance of the; British Commission's recommendations lies in their recognition of the principle that a citizen's financial obligations to his family ought to be considered when assessing the burden of taxation he is required to carry. In deciding upon tho limit of exemption, £l5O, •which is not very liberal, the Commission was actuated, 1 it states, not by any considerations of the standard of living or the value of money in these times of high prices, but by the financial necessities of the*, State. In practice this is generally tho deciding factor in arriving at the limit of exemption, and if New Zealand were to decide to adopt modifications of the income tax method in conformity with the new British principles it would probably be found necessary to fix the limit lower than £3OO in order to mako up for tho concessions given to taxpayers with family responsibilities. Wo do not ' think that this should give rise to any real grievance, since under present conditions the bachelor with an income of £l6O per annum is probably better able to bear a email share- of direct taxation than the family man with an income of £320. A readjustment of the Now Zealand system on the lines indicated need not, however, neeessari'y mean depressing the line of oxemption to the British level. It might be found upon examinatiou that a new limit of £2OO or even £250 would make good the revenue lost by concessions to married folk, .particularly if tho system of graduation were carried upwards indefinitely instead of stopping at 7s 6d in the £asis at present the case. If Mr Massey is disinclined to carry out his pledge to have the question of taxation incidence investigated here in New Zealand, he might do worse than accept, in the dirccti'oll9 wo have indicated, the very just and equitable principles laid down by the British Commission.

Tie voice of what a certain section of the English Press delights to term ''the black-coated proletariat" is being heard with increasing frequency in these days of rising prices. Tho latest outcry is on behalf of tho stipendiary members of the legal profession. At tho annual meeting of the Hamilton Law Society, tho president, Mr. IT. T. Gillies, said that Judges' salaries had not been altered for ten years, and the result was that to-day some of the inferior practitioners were earning as much as the Judgeß. Tho number of Judges was inadequate, and ho believed that many of them worked seventyfi?e .hours a week. If it was possible for Judges to form a trades union they had the best possible case in favour of oneThe same remarks, he said, applied generally to magistrates- Very few successful la.wyers would nowadays accept an appointment as Stipendiary Magistrate. Tho clerks in tho Magistrates' Oourt3 wero also underpaid. This, of course, is merely additional evidence that tho 'cost of living problem has ceased to affect merely the- manual worker, and that its solution is being demanded by a daily widening circle recruited from the middle and professional classes. A Government which refuses to address itself seriously to the task of finding a remedy will soon find itself with very little baoking in the country.

That warsj are ©xcieedsng)!y icxpen-* siv's has.been demonstrated in the last few yeara with a force ' that nobody could resist; but probably few people have an idea of tho Cost of making peace. The British Foreign Office recently announced that tho cost of tho British delegation to the Peace Confei*ence in Paris was moro than half a million sterling, made up aa follows:

Salaries, travelling: expenses, eto. - 64,804 Hiro of hotels, furniture, etc - - 205,004 Food and hotel service - - - 67,G20 Passenger and mail services by aeroplane 103,000 Printing, ©to. ..... 62,480 Total £503,3GS

Tho minimum rate for salaries was £1 a week, paid to girl guides, who acted as messengers in the offices of the delegation at the Hotel Astoria. The period covered by this expenditure was from December, 1918, to September, 1919.