INCREASED TAXATION

Otago Witness, Issue 3488, 18 January 1921, Page 36

INCREASED TAXATION

j STATEMENT BY MR MASSEY. ! LARGE INCREASE IN REGISTERED COMPANIES. | WELLINGTON, January 16. : Mr Massey was asked by a representative of the press if he had anything to say in reply to criticisms which have appeared in some newspapers recently in regard to the legislation of last session providing for increased taxation. The Prime Minister stated that he had no doubt a good deal could be said in this connection, but he would take the opportunity to deal with just one or two of the points raised. It seemed, for instance, to be imagined by i the critics referred to that once war had ceased all expenditure in connection with it would at once cease ; but as a matter of fact there were enormous liabilities left after the war had come to an end. For instance, the interest and sinking fund on tlie war loans and war pensions, increased salaries, and bonuses caused by the high cost j of living amounted to many millions per j annum additional as compared with tho i pre-war period, and there was only one way | in which these liabilities Could be met—- | namely, by taxation. Ihe statement that the Government and i Par.iament committed an error last session by increasing taxation without making the slightest attempt to check the growth of expenditure was quite contrary to fact, iho Government had been engaged ever since the elections in one continuous struggle against the demands from all over the dominion for increased expenditure, and also in endeavouring to reduce the expenses of administration. \\ ith regard to the latter, he expected later to be able to show that during the present half-year the burden upon the taxpayer had been reduced by several hundreds of thousands per annum. \\ ith regard to the section of the Act passed last session which provided for the next collection of the land and income tax, it I was necessary to bear in mind that the increase in the total maximum rate from 7s 6d to 8s 9d was not so heavy as would appear from a superficial comparison of tho | rates, and this increase, if it was required, would not conic into operation until, in tho case of the land tax, November of this year, and, in the case of the income tax, February of next year, just about the time | when, according to present appearances, in- - creased revenue might be urgently ’ ro- | qriircd. The existing taxation is 3s in the £ ordinary income rate, levied on taxablo income, and 4s 6d in the £ levied on the assessable income—that is, income before exemphons have been deducted (the proposed cs 9d is assessable income only). The tax is admittedly heavy, but ho thought that tno probable effect had been greatly exaggerated. Certainly the rates in New Zealand were much less than in England, i r J lie statement that taxation on the scale now proposed would have the effect of checking enterprise was contradicted by the fact that there had been a very large increase in the number of companies registered during the last year, accompanied °by an urgent demand for canitel f ..

business over 500 new companies being’ registererl during the year, with a capital or millions. But, as usual with adverse criticism, other side of the ledger was conveniently ignored. For instance, important alterations are made by way of exempting smaller mortgagors from land tax up to the amount of their mortgages. There is better provision for exemption of widows with children, exemption from income tax m respect of dependent children, and also in respect of insurance premiums. There is also discrimination between earned and unearned income, and exemption in respect of income tax on property held by trustees for maintenance and education of chiiuren. As a matter of fact, there are 80 many exemptions that doubt has been expressed as to whether increases will bo equal to them. It was necessary to remember, too, that the taxes to which objection had been taken would not be collected until after the passing of the I.and and Income Tax Bill of next session, by which time he would have a very much better idea of the amount of money required than was possible at present. lie need scarcely add that he would have much more pleasure in substantially reducing taxation than in maintaining th'o present rates or_ increasing them, but the country s obligations must be met.