TAXATION OF INCOMES.

New Zealand Herald, Volume LXVIII, Issue 20976, 12 September 1931, Page 9

TAXATION OF INCOMES.

STANDARD RATE NOW ss. REDUCTION OF EXEMPTIONS. more indirect taxes. BEER, TOBACCO AND PETROL. By Telegraph—Press Association—Copyright. British Wireless. RUGBY. Sept. 10. Approximate estimates of the additional leienuo to be raised this year by new taxation and thp. corresponding proceeds in a full year are as follows: This year. Full vear. Income tax . # . . £20,000,000 £57,500,000 tfeer duty .. .. 4.500,000 10.000,000 tobacco .. ... '2.500.000 4.000,000 , i • ' ' • * 4.000.000 7.500,000 '.Entertainments .. 1,000.000 '2.333,333

The Government proposes to increase the standard rate of income fax by 6d to 5s in the pound, and to increase by 10 per cent, tho amount of the surtax payable in respect of incomes exceeding £2OOO.

Relief for industry, roughly offsetting the increase in the. standard rate, which it is hoped will encourage the replacement of old plant, is to be given by means of increases in tho existing allowances for depreciation. The personal allowance for married men is to be reduced from £225 to £l5O, and that for single men from £135 to £IOO. Allowances for children are to be reduced from £6O to £SO for the first, child and from £SO to £4O for the second. These are the chief factors in determining the exemptions. The limit of allowances in respect of earned income, however, are increased from one-sixth, with a maximum of £250, to one-fifth, with a maximum of £3OO. Under tho provisions of tho last Budget, the first £250 of taxable income pays at four-ninths of the standard rate (i.e., 2s in the pound). It is now proposed that tax be levied at half the standard rate (i.e., 2s 6d), only on tho first £175 of taxable income, tho remainder being taxed at the standard rate.

Tho duty on beer is increased by one penny a pint. The duty on tobacco is increased by 8d per lb.—from 8s lOd to 9s 6d per lb. The duty on petrol is increased by 2d a gallon—from 6d to Bd.

Tho scale of the entertainment tax is to be increased by 16 2-3 per cent. Resolutions bringing the new duties on beer, tobacco and petrol into operation ■were carried without a division, and tho House rose.

The standard rate of income tax vras Is 2d in 1914, and rose to 6s, that rate being in force from 1918-19 to 1921-22. In the following year, it was reduced to ss; in 1923-24 and 1924-25, it was 4s 6d; from 1925-26 to 1929-30 it was 4s. Mr. Snowden raised it to 4s 6d in 1930-31, and now proposes to raise it again to the level of 1922-23.

The effect of the changes in allowances may be illustrated by the taxation of an earned income of £6OO, in the case of a married man with three children. Last year, his total exemptions were £485, and he paid 2s in the pound on £lls, i.e., £ll 10s. Under the new proposals, his exemptions will be £4OO, but he will pay 2s 6d tax on £175 and 5s tax on £25, a total of £2B 2s 6d. A single man in receipt of an unearned income of £6OO would pay £6O 17s 6d last year, and would now be liable to a tax o£ £lO3 2s 6d.

DETAILS 0E SAVINGS. CUT IN DOLE PAYMENTS. ' STATE SALARIES LOWER. Britifk "Wireless. RUGBY, Sept. 10. The National Government's economy proposals as set out in the White Paper will secure reductions in expenditure estimated at £22,000,000 in the current financial year. The saving will be £70,032,000 in a full year, including the following:— Salaries of Ministers, Judges, Civil Servants, Defence Forces, £4,53-1.000. Other Defence Services, £5,000,000. Education, £10.300,000. Grants to universities, £150,000. Health services, £1,250.000. Police, £500,000. Agriculture, £655,000. Forestry, £478,000. Empire Marketing Board, £250,000. Unemployment grants, £500.000. Unemployment insurance £25,800,000, with an increase of £10.000,000 in contributions. Road fund, £7,865.000. Miscellaneous, £2.500.000. The largest saving is effect ed under the heading of unemployment insurance. The reduction in expenditure from the unemployment fund amounts in a full year to £25,800,000, and the income of the fund is to be supplemented by increases in the contributions of employers and workmen, aggregating £10,000,000. This result will bo mainly achieved by a reduction in •I ho weekly benefit rates, except in that for dependent children, of 10 pel- cent. The benefit to unemployed single men is thus reduced from 17s to 15s a week, Corresponding cuts are to be made in the other rates. The. saving from this reduction will be £12,800,000.

Aii increase of 10 per cent. in the weekly contributions by employers a,id employed, with corresponding increases in the other classes of contributors, and the limitation of benefit, to 26 weeks, followed by a, transfer to the provisional class, will produce £10,000,000. The removal of anomalies will effect a saving of £13,000,000. This makes a total of £35,800,(100.

Other economies include reductions in the salaries of Ministers, members of Parliament, Civil Servants, members of the Defence Services, amounting to moro than £4,500,000. Regarding the salary reductions, the Ministerial salaries will be reduced bv amounts ranging from 20 per cent, in cases of £SOOO a year and over, to 10 per cent, in cases under £2OOO. 'lhe allowances to members of the House of Commons will be reduced by 10 per cent. Regarding tho Defence Services, the conomy will be £5,000,000, exclusive of savings on pay and pensions. It is recognised that this will be difficult, m view of the reductions made during the recent

Regarding education, a 15 per cent, cut. in. teachers' salaries will be imposed, which will account for nearly £6,000,000 of the total savings of £10,300,000. r J.he economies in pay, etc., will take effect from Octob'OT 1.