TAXING THE FAMILY.

New Zealand Herald, Volume LXV, Issue 19931, 27 April 1928, Page 10

TAXING THE FAMILY.

A further substantial measure of relief to taxpayers with families is proposed in the British Budget. The deduction from assessable income is to be increased from £36 to £6O in respect of the first child and from £27 to £SO in respect of each additional child. This is manifestly more liberal than the rebate of £SO for each child—without the logical distinction in favour of the first—allowed in New Zealand. But already the British exemptions in favour of the family as against the taxpayer without dependants were vastly more generous than the corresponding concessions in New Zealand. Under New Zealand's amended schedule of last year the general exemption of £3OO is withdrawn between £450 and £9OO ; from the balance of income, deductions are allowed at the rate of £SO for each child, the amount of life insurance premiums, with a limit, and the like, and any contributions toward the support of a widowed mother. If the taxpayer is supporting both parents or has" other dependants, no relief is given. The sum remaining determines the rate of tax, and from the amount thus calculated, deduction of one-tenth is made in respect of earned income, with a limit of £2OOO. In Britain, there is a long list of exemptions granted without regard to the amount of income : personal allowance of £135, with £9O for the taxpayer's wife, or £6O for a housekeeper in charge of a widower's children; the children's allowances which are continued during the whole period of education, irrespective of age; £25 in respect of any dependent relative ; a large rebate in respect of life insurance premiums, and, finally, a rebate of one-sixth in respect of earned income. All these deductions are made before the tax is computed. Their effect may be illustrated by reference to an earned income of £750 in various hands. Received by a single man, with no claim for special exemptions, it would be taxed to the extent of £lO2 10s in Britain, as against only £25 in New Zealand—more than fourfold. A married man, with three children, paying £SO in insurance premiums, and contributing £SO to tho support

of his aged parents, will now have to pay only £l4. In New Zealand, the tax in these circumstances would be £l2. Although taxation in Britain is nominally so much heavier, it allows to the family taxpayer much more generous relief: in this case £225 in personal exemption, as against £l5O in New Zealand: £l6O instead of £l5O for children; £SO for dependent pai-ents' support, denied in New Zealand ; and similar relief in respect of insurance. But the greatest anomaly is in the calculation of earned income. Because the New Zealand concession is only ]0 per cent, of the tax on unearned income, it is very much less than the British rebate of one-sixth of assessable income. In the case taken for illustration, tho rebate is equivalent to a deduction of only £27, or 3.6 per cent., from income. From this analysis, it appears that a very large measure of relief would have to be given to the family in New Zealand to excel the concessions granted in Britain,!