DRASTIC RISES IN TAXES

Southland Times, Issue 24163, 27 June 1940, Page 4

DRASTIC RISES IN TAXES

WAGES LEVY MAY BE DOUBLED

CHARGE ON INCOME MUCH HIGHER

rmST WAR BUDGET DUE THIS EVENING

(From Our Parliamentary Reporter) WELLINGTON, June 26.’ Drastic increases in direct taxation will be a feature of New Zealand’s first war Budget which is to be presented in the House of Representatives tomorrow night by the Minister of Finance (the Hon. W. Nash). There are grounds for believing that it will be the most severe in the British Commonwealth of Nations outside the United Kingdom, for no one has any illusions about the task that lies ahead of the Dominion along with the other Empire countries, and the people of this country must be prepared to pay heavily for their share of the war. The cost of the war to New Zealand was assessed in March by the Minister of Finance to be £33,000,000 in the current year, but the amount which the Dominion will have to provide for the war effort will probably be nearer £40,000,000. The Government intends, it is believed, to go straight to the most direct course of revenue, income tax, for its greatest yield. The present basic rate of 2/- in the pound, increased by 15 per cent, after the outbreak of war, will probably go to 3/-, but on the higher income levies it will rise steeply until after a certain figure it will not be much short of 20/- in the pound. The present maximum is 8/7 in the pound at £7900 without the increase of 15 per cent, as a war measure, but indications are that the new tax will soar far above that.

HIGHER COMPANY TAX It is expected that in sympathy with the rise in income tax there will also be a sharp increase in the company tax. Under this heading the maximum fixed in the last Budget was 7/11 reached at £8875.

It is .well known that greater demands are being made .all the time on the Social Security Fund and here again the public must be prepared to face an increased burden. The needs of the times, however, are more for national security than social security and it is likely that there will be levied a national security wages tax of 2/- in the pound, twice the present figure, in which there will be incorporated the present Social Security charge. Contrary to general expectations it is understood that there will not be heavy taxing on luxuries which has been expected as the Government evidently intends to adhere to its frequently expressed view that direct taxation is the most just and that as it is drawing heavily on that source of revenue the taxpayer should be comparatively immune from levy in the other direction.

EXPENDITURE PRUNED Departmental expenditure, it is reported, has been severely pruned. The estimates of the various State departments have been revised and checked time and time again and it is freely reported that the final figures v/tere approved by the Cabinet until early this week. The department in which the most substantial reductions in expenditure will be made is that of public works, the vote of which for general purposes will probably be reduced by as much as £6,000,000. In addition the expenditure on highways is likely to be almost £3,000,000 below that of last year. The expenditure of the Public Works Department would have been more heavily reduced if the extra provision for defence works, amounting to more than £2,000,000 above last year’s figure, had not to be made.

No details of sectional expenditure are ascertainable, but it is safe to predict that a heavy curtailment will be made on railway construction and the improvement of lines. The amount provided in the Budget last year for railway purposes was £5,230,000, and this figure will probably drop to about £3,000,000. The only activity of the Public Works Department, excluding defence works, which is expected to receive a higher allocation than last year is land improvement, a. work which is part of the Government’s policy for increasing the productivity of the Dominion.