Manawatu Evening Standard. FRIDAY, SEPTEMBER 2, 1927. AN UNSATISFACTORY ADJUSTMENT.

Manawatu Standard, Volume XLVII, Issue 236, 2 September 1927, Page 6

Manawatu Evening Standard. FRIDAY, SEPTEMBER 2, 1927. AN UNSATISFACTORY ADJUSTMENT.

The Government, or should we say the Minister of Finance, is not likely to receive many congratulations on its method of adjusting the income tax, as set forth in the annual Land and Income Tax Bill which made its appearance in the House of Representatives on Tuesday. It has been understood for some time past that there was little or no intention of reducing taxation' this year, the Minister of Finance holding to the opinion that the circumstances of the country did not permit of any reduction being made at present. Adjustments were, however, promised, and the first of these made its appearance on Tuesday. Under the Minister’s proposals a certain amount of relief is given to the larger income taxpayers, but this is compensated for by a reduction of the exemption hitherto afforded to the salaries and professional classes of taxpayers. All taxpayers were formei’ly allowed exemption upon the first £3OO of their incomes, but the amending Act of 1917 removed the benefit of that exemption upon all incomes in excess of £6OO, the reduction being effected on a £1 for £1 basis, until it disappeared altogether at £9OO. Now it is proposed that the exemption reduction shall begin at £450, so that a salaried person, in receipt of £6OO per annum, will pay tax on £75 which was formerly free of tax. The graduated scale of the withdrawal is, it is true, only half the former rate. Income tax was levied last year on taxable incomes over £3OO at the rate of 7d in the £l, increased by 2-300ths of a penny for each pound in excess of £3OO upon to £6OOO. The new rate increases the graduated scale by l-100th of a penny on incomes from £3OO to £ISOO, so that at £6OO the taxpayer will be paying lOd in the £1 income tax, and, in increasing ratio, up to £ISOO. He will be actually called called upon to pay 50 per cent, more on the graduated scale than formerly in addition to the minimum rate of 7d in the £l. From £ISOO to £3900 he will pay at the rate of 3-400ths of a penny, which represents a 12J per cent, rise. Froin £3900 to £5900 the scale rises by l-200th of a penny, which affords relief of 25 per cent, in the graduated scale. Incomes in excess of £5900 are graduated at l-400th of a penny as compared with l-300th over £6OOO under the old scale. The actual effect of these adjustments will be, as we have said, to increase taxation levied on the salaried and professional classes and to give a certain amount of relief to the larger incomes mostly earned by companies. At the same time the latter will still pay more taxation and pay on a heavier scale than incomes between £3OO and £1500; but, in regard to the latter, the more oppressive incidence of the

new tax will fall upon those’ in receipt of incomes between ,£3OO and £OOO. The Minister of Finance will, it is to be hoped, endeavour to justify the somewhat extraordinary policy he is adopting, presumably ..at the instigation of his financial advisers, but it is to be assumed also with his approval. There will be. a general feeling of disappointment that the Government has not seen its way to grant relief from the burden of taxation however small that relief might have been.