Poverty Bay Herald. PUBLISHED EVERY EVENING. GISBORNE, THURSDAY, SEPT. 16, 1920. TAXATION ADJUSTMENTS.

Poverty Bay Herald, Volume XLVII, Issue 15320, 16 September 1920, Page 4

Poverty Bay Herald. PUBLISHED EVERY EVENING. GISBORNE, THURSDAY, SEPT. 16, 1920. TAXATION ADJUSTMENTS.

Before the war the New Zealand Government managed to rub along very well with a revenue of twelve million pounds per annum derived from taxation ; to-day the. requirement, m order to make both ends meet, is something m the neighborhood of thirty millions. The problem before the Finance Minister is how to extract that amount of. money from the pockets of the people without causing public dissatisfaction and resentment. The principle generally acknowledged is that taxation should fall upon the shoulders best able to bear it; that it should be spread evenly and fairly throughout the community according to the taxpayers' ability to pay. A< further principle which is now coming into recognition is that taxation should be applied m., a persuasive, and perhaps punitive manner, to bring about a more even distribution of wealth. Mr Massey m his Land and Income Tax Bill, ;now .before Parliament gives sanction to this latter principle by the provision, that he makes for what he terms hui bursting up policy, which imposes an. increase, oi. 50 per cent over the ordinary taxation m cases where large owners do hot commence improving their holdings. Until f ui-ther details are available it is not quite possible to state whether his proposals will ' be likely to produce the effect intended, which is to compel the subdivision of large estates, or, at any-* rate, a much higher rate of production from such ot them as are suitable for intensive cultivation and closer settlement. Meantime, however, there is a good deal to interest m the proposals of the Bill. The Finance Minister disclaims the idea that it ip intended to raise more money by way of taxation, and states that- he will be content with approximately the same- amount of revenue as was derived last year, but the measure seeks to effect various adjustments, easing the burden here and stiffening it there. Some relief is given to the farmers with mortgages upon their properties— men who are struggling to get a footing on the land. Such men will be granted complete exemption up to £4000, after which amount the exemption is to disappear altogether on a sliding scale at £8000. Tlie concession,, though it Will not give complete satisfaction, is reasonably generous and should be a help to many soldier set- . tiers who have recently gone upon the land. Another important provision m this Bill represents a "welcome departure from the old policy iii respect to taxation on incomes. For the first time (Mr Massey states) there is to ,be - discrimination between earned and unearned income for the purposes of taxation. It is proposed to enlarge' the exemption m respect to the former form ,oi income. Another adjustment is 'the provision increasing the exemption limit m respect to taxpayers with families. The present exemption of £25 for each childT is exactly doubled, while a similar exemption bf £50 is to be allowed any taxpayer who maintains his mother. The concession is a good one, but not quite so generous as it looks. Such exemptions only apply to the ordinary tax, and not at all to the surtax, which, com-, pels men to cfifp most deeply into their pockets. .The Finance Minister does not appear to have given heed- to the very general complaint that business firms, including many small companies whose shareholders are dependent upon the profits for their livelihood, are taxed out of proportion to other sections oi the community — land-owners, for instance — with an equal- turnover. He makes some small attempt to change the graduation both of the land and the income tax, but it w'Cl not , be a material aid to those who are hit most severely. Companies registered m New Zealand and trading outside the Dominion will be called upon to pay income tax on their foreign profits, "which will pro/ bably mean for them a double impost as they are almost certain to be taxed m the country where the profits are made. The, same objectionable principle of double taxation, which the Imperial Government has agreed to alleviate, is involved m the provision that income tax shall be collected from, non-residents of the Dominion on revenue derived from Government oiy local body debentures. Such an impost seems hardly to be keeping ' faith with people overseas who have invested their money m New Zealand loans, nor. is it likely to encourage the flow of capital from one part of the ' Empire ;to the . other. . Cooperative dairy companies. will^ be required to pay .on their incomes, less the amounts paid to suppliers Of milk, and local bodies, will have to pay on the income dorived from thou* .trading departments. If such income comes within the scope of the -jjrachiated tax on all profits oyer £6000, the tax under the new adjustments may. reach 7s 4d m the £, plus a surchargo of 20 per cent, and local- bodies, Hke everybody else, will have no option but to pass th_ impost on. It is being urged by some of the members of the. House that the Premier's taxation proposals fail m that there has been -no attempt to reduce Customs duties, by which nieans the bulk of tlie taxation of tho country is derived and which, they claim, press most heavily on the poorer people. It is a moot point whether that is so, for the person who lives siihply and eschews luxuries will find that *his taxation through the Customs is not heavy, whilst the other who buys motor cars, whisky, Silk dresses, fancy boots, and other s'uperflqitiea is contributing the bulk of the Customs revenue. Tlie Government have promised a scientific readjustment of the tariff at some future date, and considering : it ' has been a good many years since there was any revision we ehould_ say that was necessary, but meantime if the burdens of. the people are to be eased it might be as well for Parliament to look at ,-the other side of the lodger and see if it is not possible to effect economies m administration, thereby eliminating the need for so much taxation.