TAXATION BURDEN

Otago Daily Times, Issue 23321, 13 October 1937, Page 10

TAXATION BURDEN

A STAGGERING INCREASE £10,000,000 IN TWO YEARS A REMISSION JUSTIFIED (From Our Parliamentary Reporter) WELLINGTON, Oct. 12. The opinion that the taxpayers were justified in expecting some remission of taxation was expressed by the Leader of the Opposition (Mr A. Hamilton) during the second reading debate on the Land and Income Tax (Annual) Bill in the House of Representatives to-day. “ The load of taxation seems to be getting heavier and heavier,” said Mr Hamilton. Quoting figures showing the increased amount now being paid by way of land tax and income tax, he said it had now reached £3,500,000 more than two years ago That was a huge increase. In 193536, the year before the Government came into office, land and income tax yielded a little over £5,000,000. For 1936-37 the Government’s first year of office, the amount was £7,620,593. That was a big rise in one year. According to this year’s estimate the amount collected would go up by £1,000,000 more.

Mr Hamilton said the amount collected in 1935-36 from all sources of taxation was £25,515,032. For 193637 the amount was £31,608,101, and this year it was estimated to produce £35,518,000, an increase of £4,000,000. An increase in two years of practically £10,000,000 was fairly staggering. It was true that not all that amount was the result of extra taxation, but that some of it was due to the prosperity of the country after emerging from the years of the depression. The taxpayers were justified, however, in looking for some easement of the present burden of taxation. The land tax collected last year, Mr Hamilton continued. was £250,000 below what the Government estimated it would collect when it reinstated the graduated land tax. He thought the Minister of Finance would do well to ask his department to furnish him with a return showing why the amount was less than the estimate. It indicated the result of the action of the Government in trying to impose excessive taxation. In such circumstances the taxpayers took steps to readjust their assets. Mr Hamilton referred to the announcement in the Budget that, so far as land tax was concerned, provision would be made this year for relief of proved hardship. He asked the Minister if he would consider embodying in his hardship provision a hardship clause in the 1929 Land and Income Tax Amendment Act. This permitted relief to be granted “on any fair and reasonable grounds whatsoever.” That particular clause had been inserted by the United Government-, which the Labour Party was supporting at the time. It proved a useful provision for dealing with cases of hardship. After quoting figures showing the increased income tax payable on incomes ranging from £450 to £IOOO, Mr Hamilton said that since the Government had come into office it had imposed exceedingly heavy burdens on reasonably small income taxpayers. In 1927, while in Opposition, the Prime Minister (Mr M. J. Savage) had divided the House on several occasions when the then Government proposed to increase the rate of taxation on the higher incomes, but when the Labour Party assumed office it raised by 81 per cent, the income tax paid by the individual on a salary of £SOO The Government also denied the taxpayers the right to deduct from their assessable income the amount they paid by way of unemployment taxation.

Consideration of the position relating to unearned income was advocated by Mr Hamilton. He said that there were many people who had put away savings from which they drew their income. That income was their superannuation, and yet they were taxed 33J per cent, greater than superannuation. He was not blaming the Government for that situation, because it had existed before. Nevertheless, he thought the present taxation a hardship on people who had saved a little. The Minister of Finance (Mr W. Nash): The first £220 is exempt. Mr Hamilton: That is a help, but I think it is wise to encourage people to make provision for their old age The bulk of the income tax. Mr Hamilton added, was paid by companies. despite the fact that many people thought most of it came from individuals.

“ There is one thing on which I want to cross swords with the Government.” said Mr Hamilton. “ I have heard members of the Government say that the Government can spend the taxpayers’ money better than the taxpayers themselves.” The Minister of Finance: I have never made that statement. Mr Hamilton: I think it is wise to leave as much with the taxpayer as possible. “ There is a danger in collecting too much taxation in prosperous years," Mr Hamilton concluded. “It is easy enough to spend money when you have it, but how is the Government going to adjust the position when the revenue falls? If the expenditure is too high, there will be trouble when the revenue is not there to meet it. We might undermine the system if we don’t watch it carefully.”