NEW TAX RATES

New Zealand Herald, Volume LXXVI, Issue 23429, 19 August 1939, Page 17

NEW TAX RATES

THE LEVY ON INCOMES SOME CHANGES IN SYSTEM BUDGET PROPOSALS CONFIRMED INCREASED ESTATE DUTIES [BY TELEGRAPH—SPECIAL REPORTER] WELLINGTON, Friday Taxing proposals outlined in the Budget are given legislative effect by clauses in the Finance Bill and by the Land and Income Tax (Annual) Bill, both of which were introduced in the House of Representatives to-day. Many of the taxation clauses in the first bill are of a highly technical nature, but the most important is that which reduces the personal exemption £^oo" °°me tax l )llr P° ses from £2lO to One clause concerning overseas companies operating in New Zealand provides that interest on overdraft on current account is placed on the same basis as interest on fixed loans for the computation of taxation. Tax on Capitalised Interest 'An additional clause relating to remitted interest ensures that a person does not carry forward a fictitious loss or interest against real profit. There is a clause-relating to the payment o ftaxation on capitalised interest. Hitherto capitalised arrears of mortgage interest have been assessed as income for income tax purposes in the year in which . capitalisation occurred, but it is now proposed to spread I the capitalised interest over the years ■ in which it accrued. A section which is to come into force j on .November 1 next requires any person j leaving New Zealand, whether by sea | or air. to obtain a clearance from the j Commissionei>of Taxes that he has paid his income tax and social security charge before a ticket to travel may be issued. Statement by Minister i A third section of the bill gives legislative effect to the Budget proposals to increase estate, succession ana gift duties, and to discontinue the present exemption of £IOOO for life insurance moneys. lii introducing the bill, the actingMinister of Finance, the Hon. P. Fraser, said that the only change from the Budget taxation proposals was a slight variation in. the original provision reducing the present exemption for estates passing to widows.Alimony is to be exempted from income taxation. Rates ol Estate Duty A schedule to the bill sets out the scale of rates of estate duty. These range from 1 1-5 per cent, when the final balance of the estate is between £IOOO and £2OOO, up to S per cent for balances between £IO,OOO and £II.OOO. The rates increase very steeply from then on. The rates of land and income tax proposed in the Budget are struck by the Land and Income Tax (Annual) Bill. These rates, which apply to the current financial vear, are set out in detail in a schedule to the bill.

In detailing the tax proposals in his Budget speech, the Prime Minister. Mr. Savage, said that for individuals the present rate of. income tax was Is Sd in the pound, increased by l-100th of a penny for every pound of taxable income up to £5500 and thereafter by 1-loOth of a penny up to a maximum of 8s 2d in the pound for earned income. On unearned income these rates increased by one-third. To obtain the additional revenue required it was proposed to increase the basic rate by fourpence. making it 2s in the pound, and to continue the graduation beyond £'5500 at l-100tli of a penny, instead of 1-loOth of a penny as at present, up to a maximum of 8s 7d in the pound reached at £7900. At the same time the amount of the general exemption would be reduced from £2lO to £2OO.

In regard to companies the basic rate was to be raised from Is to 2s in the pound to bring it to the same level as proposed for individuals. The rate of graduation, however, was to be reduced, from the present rate of l-100th •of a penny in the pound up to £5500 and 1-loOth of a penny thereafter up to a maximum of 7s 6d in the pound, to a rate of l-125t1i of a penny in the pound up to a maximum of 7s lid reached at £8875. FINANCIAL SKYROCKET HON. J. G. COBBE'S COMMENTS [by telegraph—special reporter] WELLINGTON, Friday "There was great applause when New Zealand's financial skyrocket scattered its many coloured stars in the skv, but the stars have gone, the stick is coming ■ down and certain people are wondering whose head it will hit," said the Hon. J. G.' Cobbe (Opposition—Manawatu) during the financial debate in the House of Representatives to-day. "The deplorable and humiliating state of the Dominion's finances at the end of the highest three-year period of income New Zealand lias ever had." he continued, "should be a lesson to the Government that skyrocket methods of finance have only one end."

COMMISSIONER CONTROL THE PUBLIC SERVICE [BY TELEGRAPH —SPECIAL REPORTER] WELLINGTON, Friday The opinion that control by the Public Service Commissioner was good up to a point, but that beyond that point it was like the fifth wheel in the coach—no nse whatever—was expressed by Mr. If. K Combs (Government—Wellington Suburbs) in the debate on the- Financial Statement in the House to-day. As one who had had the experience of working in the service and for the public servants. Mr. Combs said the public servants were a great credit to the country. Mr. Combs claimed that the Labour Government had put many of the anomalies in the service right. The public servants had no justice in but in 1939 they were in a fair way to achieve a standard of justice commensurate with the service they rendered.

-The commissioner had instituted efficiency tests, he added. He had found himself in the position when he could not personally know the merits of the staff under his control. APPRENTICES ON FARMS HELP IN BUYING LAND [BY TET,EOIIAPir —SPECIAL REPORTER] WELLINGTON. Friday A scheme of apprenticeship to enable young men without capital eventually to take up land was advocated by Mr. H. G. Dickie (Opposition—Patea) during the finamcial debate in the House of Representatives to-day. Mr. Dickie , said if men could 'be apprenticed to formers, with suitable safeguards as to tuition in farming, the farm Inbour problem would bo solved to a certain extent. Instead of a subsidv being paid, the money could be banked for the apprentices for five years, after -which the Government might help to finance them ill properties of their own.