TAXATION OF INCOMES

Otago Witness, Issue 4057, 15 December 1931, Page 61

TAXATION OF INCOMES

SHARP INCREASE IN LEVY NO LIKELIHOOD OF REMISSIONS. WELLINGTON, December 13. Payment of land and income tax, for which the demands will sdon be issued, is likely to cause.embarrassment to many taxpayers whose incomes have been considerably reduced since last year. The coming demands will be issued to cover the returns of income for the year ended March 31, 1931, and the assessments already sent out by the department show the unmistakable effect of the recent increases in direct taxation. In numerous instances taxpayers will be called upon to pay double, and even treble, the amount of taxation which they had to find in the previous year, and it is almost certain that hardship will be experienced by many individuals and companies in meeting their obligations. Taxpayers are now called upon to pay into the Consolidated Fund levies which are calculated upon what is probably a much higher rate of income than is being received at the present time. The due date has not been notified yet, but unless the whole amount of the taxation is paid by that date a 5 per cent, penalty on the amount of taxation liable to be paid is imposed upon the defaulter. Under the existing law there is no provision for allowing a person to pay his taxation after the due date without tho penalty for late payment being added. The question has arisen whether the Government will make allowances for the difficult time through which many taxpayers are passing and forego the 5 per cent, penalty, allowing the taxation obligations to be paid off on the instalment plan this year instead of demanding the whole amount by a defined date. The present indications are that there is absolutely no hope of any concession of this nature being granted. 'An effort was made to alleviate the burdens of land tax payers last year by accepting promissory notes, but it is doubtful whether this practice will be repeated this year. The law concerning the payment of income is rigid, and Parliament would have to pass amending legislation before anything could be done to allow the taxation payments to be made in instalments after the due date. There is at present no intention on the part of the Government to do anything of the kind. This being so, taxpayers will have to meet their obligations promptly or be subject to a 5 per cent, penalty. It is pointed out in official circles that any remission of taxation would be quite impossible. The Budgetary estimates have already been revised to meet the changing conditions, and the whole range of Government activity is dependent upon the estimated revenue being received. Borrowing by means of Treasury Bills has been undertaken by the Government in anticipation of revenue, and a serious position would be created if this revenue did not materialise. For that reason alone, much reliance is placed upon the returns from income and land tax. It was estimated in the main Budget presented by Mr Forbes at the end of July that the income tax would yield £4,230,000 and the land tax £1,100,000 this year. The general financial position became worse, however, and, with a heavy prospective decline in the- revenue, the new Minister of Finance (Mr W. Downie Stewart) was forced to have further recourse to income taxation in order to strengthen the Budget. The result was that additional imposts were placed on the income taxpayer, and necessary readjustments were made in the incidence of the land tax. The outcome was that the forecast of revenue from these sources had to be revised and the October estimate was £4,935,000 from income tax and only £625,000 from land tax. Although it is most unlikely that any concession will be made to taxpayers in respect of payment on the due date, it is pointed out that those who desire to do so may pay their taxation in instalments throughout the year, and so escape the necessity of finding what might prove an embarrassingly large amount in a lump sum after the taxation demands have been issued. The present law provides that the taxpayer, on production to the Commissioner of Taxes or any other authorised person of the notice of assessment of income for any year, may pay in advance any portion of the sum charged in income tax for the year. Every person who makes this payment in advance is entitled to interest on the . amount of the payment at the maximum , rate for the time being allowed on deposits in the Post Office Savings Bank for the period commencing on the date of , payment and ending on the day ap- : pointed as the due date of payment. 1 This fact does not appear to be gener- ’ ally known, for no great advantage is I apparently taken of the provision by the ; general body of taxpayers. Interest is > allowed only on payment of £lO or mul--5 tiples of that sum, and it is not given J unless the payment is made not less ! than three months before the due date.