“PAY AS YOU EARN”

Otago Daily Times, Issue 25458, 12 February 1944, Page 6

“PAY AS YOU EARN”

AUSTRALIAN TAXATION EARLY LEGISLATION LIKELY (N.Z.P.A. Special Aust. Correspondent) SYDNEY, Feb. 10. The early introduction of “pay as you earn ” taxation is believed to have been recommended by the Special Federal Parliamentary Committee which has been investigating the problem. The necessary legislation may be brought down during the present session of Parliament. It is understood that the scheme suggested will not wipe out the alleged present full year’s tax lag but only three-quarters of this amount. If the committee’s recommendation is adopted the Australian taxpayers will have to pay 25 per cent, of one year’s tax in instalments spread equally over three years. This means that the Australian income tax rates would be eight and one-third per cent, higher than at present for the next three years. The committee’s report, to be tabled in Parliament soon, is believed to be a compromise between the views of the Government and Opposition members. The Opposition members claim that there is no tax lag at .'present. The Government members claim that the introduction of the “pay as you earn” system would cause the loss of a year’s taxation revenue. The suggested new scheme would apply only to incomes earned by personal exertion. The present system of tax payments would apply to all other Australian incomes.

Strong opposition is being expressed to the suggestion that the Government should forgo only 75 per cent, of the year’s “mythical” tax lag. The president of the New South Wales Taxpayers’ Association, Mr McKellar White, commented: “The suggestion that taxpayers should be burdened with 8 1-3 per cent, extra taxation for three years to pay off a mythical debt is barefaced robbery and is nothing less than a brazen attempt to raise more revenue.” The president of the Constitutional Association of New South Wales, Dr Frank Louat, said: “ If the Government can see its way clear to forgo 75 per cent, of the theoretical lag why cannot the full 100 per cent, be forgotten? If 8 1-3 per cent, is added to taxation for three years the real basis will not be to make up any lag, but to increase taxation.” “ Pay as you earn ” taxation was introduced in Canada and the United States last year, and will begin in Britain from April 5. The original British plan applied “pay as you earn” only to those whose weekly wage or salary was up to £6OO a year. Last week the plan was extended to apply to all personal exertion income by wageearners.