Major Taxation Relief Unlikely

Otago Daily Times, Issue 26853, 18 August 1948, Page 4

Major Taxation Relief Unlikely

SOME INCOME CONCESSIONS Special to the Daily Times WELLINGTON, Aug. 17^ Small adjustments in the incidence of income tax are expected to be announced in the Budget to be presented in the House of Representatives on Thursday night by the Minister of Finance, Mr Nash, but in political quarters the prospects of any substantial concessions are not considered promising. The actual rates of taxation are not likely to be altered and any concession is likely to be designed to benefit more particularly the lower and middle income groups and may take the form of an increase in the personal exemption which is at present £2OO.

Numerous remits urging that the personal exemption should be increased to amounts varying from £3OO to £350 were submitted to the annual conference of the Federation of Labour, held in Dunedin at the end of April. These were referred to the national executive of the federation, which endorsed proposals for an increase in the personal exemption to a sum not less than the standard minimum wage for unskilled male adult workers. This is equivalent to £325.

Mr Nash is keeping the contents of his Budget a close secret, but if he decides to give relief by way of increasing the personal exemption, it is not considered likely that he will go as far as the proposal of the National Executive of the Federation of Labour. On the-other hand, Mr Nash may consider that a general increase in the personal exemption would reJieve a large number of young, single people without family responsibilities from the payment of income tax by eliminating them from the taxation net, and that an increase in the exemption of £IOO at present allowed for a wife would be more likely to benefit the family man in the low income bracket struggling against rising living costs. It may be considered, however, that the position could be met by an increase in the personal exemption to the married man.

The present surcharge of 15 per cent, on income tax is not likely to be removed or reduced, nor is any change anticipated in the present basic rates of inqome tax which is levied on a graduated scale, starting at 2s 5d in the £ on the first £IOO of taxable income. The surcharge which was reduced in 1946 from 33 1-3 per cent., was imposed early in the war as a special war tax. Future defence commitments, which so far have not been defined, may be advanced as a reason for the retention of the surcharge. The defence vote last year totalled £10,134,136, but an increase in expenditure under this head is generally expected.

For some time past, rumourg have been circulating that the family benefit may be increased, but these are not likely to be realised, nor is any increase anticipated in the . other monetary benefits under the Social Security Act. The sales tax. however, may be removed from a further list of commodities.

Mr Nash has already advised the Public Passenger Transport Association that he is having investigations made with a view to considering whether it would be possible to make some provision for exemption from sales tax on trolley buses, passenger omnibuses and tramcars.

The surplus in the Consolidated Fund last financial year was £1,785,712 but no indication has been given as to the proposed dispersal of this sum or whether it is to be used as a set-off to a reduction in the yield from taxation as a result of any adjustments that may be made. Income tax collected last financial year amounted to £36,632,580, which exceeded the Budget estimate by over £1.000,000. In support of remissions of taxation, it has been suggested in some quarters that the Minister will have a useful “nest egg” to do this, because all of last year’s taxation was not collected, due to administrative difficulties in some districts delaying the issue of the demands until after the close of the financial year. Customs revenue, which amounted last financial year to £24.390,880, is likely to be smaller this year. Apart from an anticipated smaller volume of imports, the loss of Customs revenue under the Geneva trade agreement has been estimated at £1,000,000. This week’s Budget will be the thirteenth presented since the Labour Government assumed office in 1935, eleven of them having been read by Mr Nash, who was absent ■ from New Zealand for two of them. He continued to hold the portfolio of Finance, however, and the financial statements were presented on his behalf by Mr M. J. Savage and the present Prime Minister, Mr Fraser, who were on those occasions 'acting as Minister of Finance. Mr Nash’s record is approached only by that of Sir Joseph Ward, who was Colonial Treasurer or Minister of Finance—the title adopted after New Zealand became a dominion —for a period of 11 Budgets. A caucus of the Parliamentary Labour Party has been called for Thursday morning, and it is expected that the Minister will then explain to the caucus his Budget proposals. The Left Wing of the party has been asking for reductions in taxation on the lower-paid worker, and should the adjustments not come up to expectations will probably make its presence felt in pressing for greater remissions than the Minister was prepared to make. Some significance is attached to the fact that the House is not likely to meet on Thursday afternoon. If the caucus is unable to reach agreement at its morning meeting, it would then have the afternoon for further discussion on the Minister’s proposals.