INCOME TAX

Northern Advocate, 2 May 1932, Page 6

INCOME TAX

| METHOD OF PAYMENT i I INSTALMENT BASIS. LIGHTENING THE BURDEN. (From Our Parliamentary Special.) WELLINGTON, This Day. The announcement by the Prime Minister that provision will be made in the Finance Bill this week for the payment of income tax on the instalment basis will be as welcome as the decision of the Government merely to rcimposc existing rates of taxation for this year. For some time business interests have represented to the Government the desirability of following the practice adopted in Great Britain, where payments arc allowed to be spread over reasonable periods after the first instalment of the tax has been paid. More than once it has been pointed out that firms carrying large stocks, and obtaining their revenue on what is tantamount to the instalment basis, were entitled to the same consideration from the Government as they extended to their clients, in order that lump sum payments of a substantial nature could bo avoided at a difficult time of the year. The general [dan of distributing payments more comfortably will be assisted by the early issue of assessments, and Mr Forbes has this in mind in presenting the annual taxing bill this session, instead of delaying its introduction until the main session. Although it is unlikely that the passage of the bill will be unduly delayed, ramifications in the taxing field usually ready debaters in the House. Labour can be expected to renew its demand for steeper graduations on higher incomes, and other members may have something to say about the re-imposition of last year's emergency charges. Returns of income tax'for the last financial year are not yet available, and the department, which has been obliged to frame its proposals on an approximate estimate only, is apparently satisfied that te re-enactment of the increased rates levied last year

will be sufficient to meet the position. There is no doubt, however, that the taxation yield this year will fall short by a substantial figure of the amount which last year found its way into the tax collector’s bag. The tentative official estimate fixes the decrease at £900,000. In addition to the reduced earning power of the average taxpayer, it must be remembered that wages tax payments are deductible by way of special exemption from assessable income for taxation purposes. If the department has not made allowance for that position, the falling off in net yield is likely to approximate £1,000,000. It has been generally anticipated that the increase in the rate and the deliberating of exemptions, would be enforced to make up leeway, but the Minister of Finance has announced a breathing space from further inroads in the meantime, and the existing rates will be reimposed for the current year. Those are set out in detail in the schedule to the Land and Income Tax Annual Act, 1931, but the case of the average earned income may be briefly outlined. If taxable income exceeds £3OO the rate is 7d for every £ in excess up to £ISOO, and in addition there are four

emergency charges -which remain. These are a 30 per cent, surtax (previously 10 per cent.) a 331-3 per cent, surtax on unearned income, a flat rate lax of 4d in the £ on income over £SOO, and elimination ol the 10 per cent, deduction on earned incomes. “ Statutory’' exemption remains at £2oo—prior to last year it Avas £3oo—diminished at the rate of £1 for every £3 of excess up to £SOO, further diminished by £1 for every £1 10/ of excess over £SOO, and leaving no exemption at £BOO.