TAXES BY INSTALMENTS.

New Zealand Herald, Volume LXIX, Issue 21167, 27 April 1932, Page 10

TAXES BY INSTALMENTS.

To assist wage and salary earners to meet their income tax obligations without running the risk of incurring penalties, a voluntary scheme has been initiated in Britain under which employers make deductions from weekly or monthly earnings to be remitted direct to the Board ol Inland Revenue. It is a form of taxpaying by instalments that is particularly useful in a country where the exemption is low and taxation so high that stern measures of economy must be practised by a large body of the people to enable them to meet it. Some system of paying taxes by instalments is a pressing need in New Zealand. Possibly the number of salary earners who are annually faced with a demand that is staggering if they have not systematically resisted the urge to spend normally during the year, is not large enough to justify the adoption of the British scheme, But the same end could be achieved with general advantages by the employment of the system that offers rebates for early payment. The present position is that income tax is collected 11 months after the close of the year in which the income was earned, when, as a rule in these days, current profits or earnings are lower. Thus there is increasing risk of default or partial default at the appointed date, with consequential embarrassment to the Treasury. The suggestion is that encouragement for advance payment should be offered by allowing a discount of, say, 5 per cent, or one penny a month on every pound paid in advance. The machinery would take the form of tax receipts the cost of which would provide the rebate according lo the month in which it was bought. A receipt for one pound bought in March' would cost 19s id and would increase by one penny each month. The adoption of this system would not only aid the taxpayer to balance his own budget, but also be of advantage to the Government, for the issue of Treasury bills would be substantially curtailed and the interest charges so avoided would probably lie less than the amount of the rebate. The trading community would also benefit by the spreading of tax payments over the year, for it would avoid the sudden dislocation that business now suffers in the month or two following the collection.