HIGHER TAXES PROPOSED

New Zealand Herald, Volume LXIV, Issue 19730, 1 September 1927, Page 11

HIGHER TAXES PROPOSED

NEW LEVIES ON INCOMES. EVIDENCE OF RESENTMENT. INEQUITABLE GRADUATION. REVENUE NEEDS QUESTIONED. The now scale of income tax lias been unfavourably received by those affected in Auckland. The increases touch a large class, who, though disappointed in their hopes of relief, were resting in the expectation that the tax burden was not to bo greater this year. Theirs lias been a rude awakening and considerable resentment is expressed at the prospect of increased demands coming to hand for payment next February. All incomes between £4OO and £B7OO will feel the heavier hand of tho tax collector. Those, however, which will bear the greatest proportionate increase in view of the number of taxpayers in the class are incomes between £450 and £750. Tho man of moderate salary has, therefore, roceived this unexpected levy in a grim spirit. The opinion is expressed that it is inequitablo to singlo out this particular class at this timo of depressed business conditions. The inequity of the new scale was the chief point made in an interview last evening by Dr. 11. Belshaw, Professor of Economics at Auckland University College. Rate of Graduation. " Taking income tax in conjunction with customs duties and having regard to the principle of minimum aggregato sacrifice, it is my opinion that the new scheme is less equitable than the old," he said. The reference tu customs duties, Dr. Belshaw explained, was because they were the main source of revenue in this country and their burden 'fell most heavily on people of small incomes. • "If no now revenue is required," con'tinued Dr. Belshaw, "the system of graduation was more equitable as it stood. If new revenue is required, it would bo more equitable to steepen the graduation on the higher incomes rather than on tho lower, leaving the present graduation up to, say, £ISOO or £2OOO as it stands. " I find it difficult to justify the relatively greater increase on lower and moderate incomes, and in any case the justification for higher taxation must first be established." No Justification lor Increase. " The Government appears to be riding roughshod through the recommendations of the Taxation Commission and of tho most important body of commercial opinion in the Dominion —tho Association of Chambers of Commerce," said Dr. E. P. Neale, secretary of the Auckland chamber. r Dr. Neale pointed out that the proposals would increase the total amount of taxation, since certain classes of xpayers would have to pay more -'*ud nobody would pay less than at present. The Minister of Finance had not, so far as he was aware, said anything to show that an increase in taxation was justified, and nothing in the public accounts gave any reason for it. Tt might be admitted that the scalo at present in force was unsatisfactory in that it made a rapid reduction of the amount of exemption on incomes between £6OO and £9OO. Probably the more gradual tapering-off provided by the now scale was commendable, but that object could have been attained without increasing the total amount of taxation. By the changes now made the principle of ccraduation had been sacrificed to some extent, in that the burden on the lower incomes had been increased, while that on the higher had been left about the same. The new rates were particularly hard on the man with about £6OO a year. Vast Majority ASected. The latest returns showed that some 2500 companies would have to pay increased incomn tax. About 300 others would not. So far as private individuals were concerned, 39,000 would have to pay more and a bare 100 would be in the same position as at present. One anomaly that had been left uncorrected was the special preferential treatmnt of company and local body debentures issued before 1923. The taxrate on these was limited to 3s and 2s 6d in the pound, respectively. The concession operated most unfairly, since it was possible that a man might be drawing his whole income from such debentures. As he had said, it was doubtful if the. Government needed more revenue, but if so, why did it not tax State and local body trading departments? This had been recommended by the Taxation Commission of 1924 and by the Association of Chambers of Commerce. It had been advocated bv the League of Nations Economic Conference at Geneva this year. Chambers of Commerce, says Dr. Neale in conclusion, might have approved the new proposals if they had provided for a larger concession to people with families. The present allowance of £SO for each child was quite inadequate.