HIGHER TAXES

Otago Daily Times, Issue 24911, 9 May 1942, Page 4

HIGHER TAXES

LEGISLATION PASSED NEW RATE ON EXCESS PROFITS (F.0.P.R.) WELLINGTON, May 8. The two taxing Bills arising out of the recent Financial Statement made by the Prime Minister, Mr Fraser, were passed by the House ,of Representatives to-day with a' minimum discussion. Little time was spent bn the committee stages, and both measures were put through during a brief interruption of the debate on the Financial Statement itself. “This Bill is concerned entirely with matters of taxation and procedure, and does little more than give legislative effect to the proposals in the Financial Statement submitted last week.” said the Minister in Charge of the Land and Income Tax Department, Mr A. H. Nordmeyer, when moving the second reading of the Finance Bill. “The two main provisions are to increase the surtax on income tax from 15 per cent, to 33 1-3 per cent., and to increase the national security tax from Is to Is 6d m the £l-” “A Little Better Off”

The Minister said that the excess profits tax had so far been payable at the rate of 60 per cent, of the residue of excess profits after deducting income tax, the social security •harge and the. national security tax. It was discovered that after imposing the new surtax of 33 1-3 per cent., unless the excess profits tax were raised, the higher surtax would be paid out of excess profits, and the individual would be no worse off than before. By raising the excess profits tax from 60 per cent, to 75 per cent., the position was to some extent ironed out. though it had not worked out evenly. , , The Minister quoted the case of a man who had an excess profit of £ooo. Under the old arrangements he would have paid £176 in excess profits tax, but with the surtax raised his excess profits tax would have been only £154. Now, however, with the new surtax and the new excess profits tax his excess profits tax would be £192. In most cases these taxpayers win be a little better off.” Mr Nordmeyer added.

Effect on Expansion

A hope that the increase in the excess profits tax would not have the effect of preventing expansion .was expressed by the Leader of .the Opposition, Mr S. G. Holland. He said he was all in favour of the prevention of profiteering, but it would be a bad thing to do anything that would check expansion. _ Mr W. A. Bodkin (Opposition, Central Otago): It does that The Prime Minister. Mr Fraser; The sum total is that, with the exception of one case, slightly less will be paid in excess duty than previously.. Regret that people with small incomes who had not received the o per cent, increase had not been exempted from the increased national security tax of 6d in the £1 was expressed by Mr J. A. Lee (Democratic Labour. Grey Lynn). He added that the proposals in the Bill brought them to a position where the State would have to find any fresh issues if there was to be capital development Mr Nordmeyer replied that as tar as removing incentive was concerned, while such. a point was reached m some cases, there existed the Excess Profits Tax Committee to examine whether money assessed as excess profits were properly so assessed H In reply to another question by Mr Holland, the Minister said it was expected that the revenue from the excess profits tax would be slightly less this year than last year, because so much of what was formerly excess profits would be, paid as income tax. It was estimated tnat last year s y ie id from the excess profits tax would be about £500,000 Both Bills were then passed.