HIGHER TAX RATES

Poverty Bay Herald, Volume LXIII, Issue 19099, 21 August 1936, Page 7

HIGHER TAX RATES

COMPARISON WITH BRITAIN IIOW INCOMES AFFECTED HARD-HIT N.Z. PAYER It is regrettable that the Minister of Finance, when putting forward in his Budget a table which purports to make a comparison of income tax in the United Kingdom with that now. proposed for New Zealand, should have used out-of-date rales for the United Kingdom, says a statement issued by the Associated Chambers of Commerce of New Zealand.

The Minister’s table—with two exceptions in the higher grades of incomes—shows the New Zealand taxpayer with a wife and t wo children as paying) less than tin- corresponding taxpayer in the United Kingdom. This is because the Minister, in his table, used ihe rates which were in force in the United Kingdom last, financial year, 1935-36, instead of the rates now operating, anil which were announced on April 21 of this year. EXEMPTIONS INCREASED Tt is true that the .Minister says, in relation 10 his table, that “owing m the recent increase of 3d in the standard rate, the amounts for UriitciT Kingdom are slight ly higher in some cases than is shown.” However, this is not the whole. Story, because, while the standard rate in the United Kingdom was increased this year, special allowances, irrespective of the size of the income, were also increased, This has the effect, in regard to different grades of income, of reducing the taxation paid by the United Kingdom income-tax payer. Consequently, the comparison becomes much less favourable to the New Zealand taxpayer, who, in many eases, is to pnv mole, not .loss, than his United Kingdom equivalent. The table below —compiled on the- same basis its the Minister's, but at the rates obtaining to-day in- the United Kingdom —sets out- the. position,

An addition to the table is a column showing New Zealand income tax plus unemployment taxes. The addition of unemployment- taxes was omitted by the Minister in his table, but it cannot- be ignored in any comparative table, because unemployment taxes are in truth nothing more- than a- form of income tax, for which there is no equivalent in the United Kingdom. The second part of the table shows, in comparison with the United Kingdom, the heavy taxes on the higher grades of unearned income in Now Zealand. The table is as follows: MARRIED COUPLE WITH TWO CHILDREN

If the severity of the rates on the New Zealand taxpayers needs anv amplification. it is given by the cabled reports of April last regarding “the stunned silence" with which the House oi Commons received the British Government’s Budget announcement, not of an anticipated further reduction in taxation, but of an increase in the haste rate ot tax on incomes. Of course, feverish rearmament was the reason for this. In the cause of rearmament, and national and Empire safety, therefore, the resources of Britain are bciiin railed up; the total defence vole is tU6O.COO.COO, or 20 per cent of the total proposed expenditure for the current financial year. The British Gov-

ernment estimates that- the yield from income tax. including surtax, will be 40 per cent of the total receipts from taxation for the current year. Tt “MOTHER HUBBARD WELCOME" The hard-hit New Zealand incometaxpayer finds himself paying in many eases, more than the man wit it a similar income in the United Kingdom. Act the Dominion has no Empire to guard, no colonies, no protectorates; in fact, it is making no real financial provision for even self-defence. The proposed expenditure on defence represents only 4 per cent of the total proposed expenditure for the current year. To say that the £6,000,000 which the New Zealand Government estimates income-tax will produce this year represents only 23 per cent of the total estimated yield from taxation, as compared with 4Ct per cent in the United Kingdom, and that therefore there cannot be much wrong, is no argument- in reply. In fact, this only emphasises the terrific burden of total taxation in 'New Zealand, which, with the aid of the further imposts of graduated land tax and increased income fax. is to produce an additional yield ot over £4.500.000 for the current financial war.

The fact is that where Britain is railing on her taxpayers for reasons of plain safety, the resources of New Zealand are being depleted for the sake of lavish expenditure on social services, and publicworks. as if this Dominion is an inexhaustible paradise at whose door it is not expected ihat need will knock. If it does, it must receive a Mother Hubbard welcome.

Earned Income Tax X,Z. tax Assessplus unemable U.K X.Z. ployment IncomeTaxpaye r Taxpayer taxes £ £ £ £ 300 nil nil 11 0 400 i n 3 3 17 14 450 4 15 7 16 23 16 503 .7 12 12 9 30 3 550 11 17 17 6 36 13 000 21 7 22 43 8 !-!C0 50 7 44 H 72 8 1.000 07 7 70 5 104 14 5.000 1.360 10 1.283 14 1.451 8 7.500 2.476 15 2.556 10 2.807 10 10.000 3.720 10 5.926 6 4.270 13 1 'neamei Itirnme Ta> .c 0.000 £ 7 op 7 £ 331 12 399 6 3.000 681 15 630 10 ' 781 10 4.0C0 1.029 5 1.140 10 1.274 17 5.000 1/131 >5 1.711 12 1.379 6 7.500 2.548 O 3.408 13 3.659 13 10.000 3201 15 5.243 3 5.582 15