TAXATION OF INCOMES.

New Zealand Herald, Volume LXV, Issue 19947, 16 May 1928, Page 12

TAXATION OF INCOMES.

NEW ZEALAND'S SCALE. REVISED RATES DEFENDED. REVIEW BY THE MINISTER. "STRAIGHTENING SAG IN LINE."

''On the question of the income tax revision I am still unrepentant," declared the Hon. \V. Dowpie Stewart, Minister of Finance, in addressing the Auckland Chamber of Commerce yesterday.

Claiming that the Chamber of Commerce could have come to a conclusion no different from that of the Government, Mr. Stewart recalled .that the income-tax had been raised spasmodically during the war, and the general reduction after the war had left the astounding .result that some classes of taxpayers were actually paying less than before the war, while other classes were paying up to 250 per cent. more. In other words, many taxpayers were not paying anything toward the cost of the war. There was a definite sag in the line which had to be straightened up, and taxpayers who had now to pay more could congratulate themselves 011 the fact that they had so long escaped. The Taxation Revision Commission of 1924 had said tho proper course was to fix a maximum and a minimum, with equitable graduations, and that was what tho Government had dono. Mr. Stewart said ho had submitted the revised figures to business men in Wellington, and he had been assured there could be no room for argument or criticism concerning them. Avoiding Social Unrest. The burden of taxation had become so enormous and had been so shifted that, whereas in 1914 taxpayers with annual incomes up to £2OOO, representing half tho national income that came under revision, were paying a quarter of the total taxation, in 1926 the same group of taxpayers represented two-thirds of tho income, but were paying only one-sixth of tho total taxation. If that were allowed to continue, it would mean the concentration of taxation on .a diminishing number of people, and ultimately tho system would yield no revenue at all. Such a state of affairs would create social unrest becauso of the feeling that some portions of the community were not paying their due share. The commission had also recommended the abolition of company taxation and its replacement by individual taxation, added the Minister. To abolish the company tax completely meant doubling tho tax on all taxpayers up to £2OOO a year. Even if the company tax were reduced by one-half, such a storm as no Government could endure would be raised.

While all agreed that direct taxation was -the sounder policy, it was a surprising thing that, when it came to making a practical change in that direction, all classes, including the Labour Party, denounced it. Tho only remedy they had suggested was to increase the tax on those with an income of £IO,OOO and over, but it was forgotten 'that, even if the whole income of those with over £IO.OOO a year was taken, it would be no more than "a drop in the bucket" as far as tho total revenue required was concerned. Better Off Than England. Reference was made by Mr. Stewart to an article in the New Zealand Herald concerning the exemptions allowed under the English system of income taxation. The Minister said he had not studied in detail the recent alterations made by Mr. Winston Churchill, Chancellor of the British Exchequer, but he ventured the opinion that no one in New Zealand would be satisfied if tho English scale were introduced here.

While certain exemptions in Britain might be greater, the taxation was higher. The nature of the British system made comparison with the New Zealand scheme verv misleading. For instance, in England the wife's income was lumped with the husband's. A comparison of New Zealand's scale with that in England or any of the Australian States would show (hat the New Zealand tax was far lighter and less burdensome to the general taxpayer than was the case in the other instances mentioned.