THE OTAGO DAILY TIMES THURSDAY, May 18, 1939. TAXATION ANOMALIES

Otago Daily Times, Issue 23811, 18 May 1939, Page 10

THE OTAGO DAILY TIMES THURSDAY, May 18, 1939. TAXATION ANOMALIES

It is not an unfamiliar suggestion that the best thing the people of New Zealand can do about taxation is to forget it. For reasons which it would be superfluous to specify that attitude is especially difficult at the present time. Mr Savage may or may not remember that he once thought taxation overdone in this Dominion. It is quite a long time even since he offered very solemn assurance that it was the Government’s anxiety that the incidence of taxation should be as equitable as possible, and reaffirmed —for even then there was need for such reaffirmation—that it was very much in earnest in the matter. The promised revision remained still unfilled, while a Parliament ran its allotted course. Doubtless the Government was very busy in placing “ first things first,” though it did find time to reintroduce the anomalies of the graduated land tax. But its memory was stimulated. In February last the Minister of Finance did not fail to make renewal of a familiar promise. He stated that a revision of the basis of land and income taxation would receive the attention of Parliament during the coming session, that the taxation system had been thoroughly examined, that the reports were all ready, and that there should be no delay when Parliament was able to give consideration to the matter. The Government’s intention seems definite, but what may be the upshot in settling the burden of taxation more evenly is still unsure, while yet important. The vigilance which the Chambers of Commerce are displaying in drawing general and specific attention to the taxation anomalies that call for removal is

in the public interest. The list of these anomalies, new or old, is a long one, and finds reflection in the experiences of the taxpayers themselves, which constitute a proper matter for timely representation to the Government if adequate relief of grievances is to be hoped for. In a statement issued by a special taxation committee set up by the Associated Chambers of Commerce, attention is particularly drawn to the position arising out of the existing provision of, the law which denies the taxpayers the right to claim a deduction for land tax paid in arriving at the amount of their assessable income for income tax purposes. The injustice of that provision has been intensified it is urged, if not made altogether intolerable, by reason of the fact that in recent years land tax has been payable on a relatively high graduated basis, while the rates of income tax payable are now at an unprecedentedly high level, in addition to which the introduction of the further impost represented in the Social Security contribution has served to aggravate the whole position. An illustration in point which is offered is that of two companies, making identical net profits, one of which pays at the rate of 7s 6d in the pound because no concession is made in respect of land tax paid, while the other pays 6s lid by reason of immunity from land tax. These rates are further affected by the Social Security tax on companies to the extent that the first of these two companies will have to pay up to 9s 8d in the pound against the 7s lid paid by the other. Justification for the disallowance of land tax as a proper item of expenditure for income tax purposes where the land has been used exclusively in the production of the taxpayer’s assessable income can be urged to hinge upon some curious propositions. It i’s suggested that the average taxpayer is inclined to adopt a fatalistic attitude to injustices. in taxation. That is probably true. But he undoubtedly does resent having to pay income tax upon an income from which a shilling in the pound has already been paid in the way of Social Security contribution. He considers himself taxed upon something which he does not receive. No argument that may be advanced for its justification can alter the effect of this system of double taxing in conducing to inequitable differences between one class of taxpayers and another. The more the Chambers of Commerce can do the better in directing the attention of the public and the Government to the effects, both as regards different groups of taxpayers and the people generally, of the taxation which in New Zealand has assumed such oppressive dimensions.