WAR EXPENSES ACCOUNT
£17,750,000 To Be Found In Dominion INCOME TAX RATES ADJUSTED “For war expenses,” said Mr Nash, “we are faced this year with an expenditure estimated at £37,500,000. As much as possible of this should be found from taxation. The special items of war taxation imposed last year would this year, if left undisturbed, produce approximately £3,500,000. Having regard to the destructive nature of the expenditure it is imperative that much more than this should be provided from revenue. In fact, it seems clearly in the best interest of the Dominion that we should aim to provide from taxation the greater part, if we cannot manage the whole, of the £17,750,000 required for expenditure in New Zealand.”
and national security tax would in no case exceed 17/6 in any £1 of income.
It was also proposed to bring all State trading activities into line as regards income-tax. At present the Government’s electric-supply undertaking, the Internal Marketing and State Coal Mines Departments, and the Commercial Broadcasting Service were exempt from such taxation. It was proposed to introduce legislation to make those activities liable for income-tax.
At a later stage there would be placed before the House proposals for the establishment of the procedure necessary to transfer to the State the whole of any excess profit made during the war period. With these additions to the field of taxation at the new rates, the incometax would, it was estimated, yield £15,450,000, an increase of £2,400,000 above what would have been received on last year’s basis of tax. The additional revenue thus available for the Consolidated Fund from income-tax and silver-coin profits amounted to £3,100,000, and as only £1,150,000 was required to balance the Budget it was proposed that all the revenue from death and gift duties, including the £1,950,000 that would otherwise be credited to the Consolidated Fund under the heading of “Stamp and' Death Duties,” should go into the War Expenses Account. If that were done the budgetary position of the Consolidated Fund for 1940-41 would be as follows:—
REVENUE Taxation—- £ Customs 7,500,000 Beer duty 1,380,000 Sales tax 3,000,000 Highways 2,600,000 Stamp duties 1,650,000 Land-tax 1,000,000 Income-tax 13,550,000 Miscellaneous 225,000 30,905,000 Interest 2,800,000 Other receipts 3,375,000 6,175,000 37,080,000 EXPENDITURE Permanent Appropriations—- £ Debt services 10,671,000 Exchange 1,500,000 Transfer highways revenue 2,583,000 Other permanent appropriations 380,000 15,134,000 Annual votes — Social services 11,834,000 Other services 9,816,000 21,650,000 Supplementary estimates and contingencies 250,000 37,034,000 Estimated surplus £46,000
For this purpose and to bridge the gap of £1,150,000 in the Consolidated Fund, consideration was first given to an upward revision of the rates of in-come-tax. In order to obviate certain anomalies which would have been accentuated by increasing the rate under the graduated system used during the last few years, it had been decided in the case of individuals that the new rates would be on a “step” basis under which each pound of taxable income would be taxed at a rate determined by reference to the particular incomegroup into which it fell. The starting rate would be 2/6 in the pound upon the first £lOO of taxable balance; 2/9 in the pound would be payable on the second £lOO of taxable balance; and 3/- in the pound upon the third £lOO of taxable balance; and so on, by increase of 3d for each £lOO of taxable balance up to a maximum rate of 12/in the pound, which would be payable upon all taxable income in excess of £3BOO. The advantage of this system lay in the fact that every taxpayer, no matter what his income, paid the same rate of tax upon each succeeding pound of taxable income; it was the logical counterpart to the grant of a personal exemption of £2OO to every taxpayer, regardless of the size of that taxpayer’s income. It was not proposed to alter the personal exemption of £2OO or the exemptions for wife and children or the provision relative to adding a percentage to the tax on unearned income. GRADUATION METHOD In the case of companies the graduation method to be applied would be similar to that used last year, but the new rate would be 2/6 in the pound rising by graduations of l/100th of a penny to 8/- in the pound at £6600, and rising thereafter by graduations of l/150th of a penny to a maximum rate of 8/9 in the pound on all income over £7950.
A further change proposed was the increase to the maximum company rate of the tax payable upon interest receivable in terms of debentures issued free of tax by companies. This change abolished the advantage hitherto secured by companies in respect of this class of debenture interest. As was the case last year the rates of tax for both companies and individuals would be increased by 15 per cent., this addition being credited to the War Expenses Account. As an indication of the effect on personal assessments of these new rates Mr Nash quoted the following examples of the amount of tax payable last year and this year respectively upon representative taxable balances, by which was meant the taxpayer’s income less the standard exemptions allowed:—
This meant that a single man with an income of £3OO would pay £l4/7/6 income tax. A married man without children with an income of £350 would pay a like amount, and a married man with a wife and one child would pay a similar sum on an income of £4OO. Provision was made so that the aggregate effect of income tax at “unearned” rates, Social Security charge,
Taxable Income-tax. balance Last year. New proposals £ £ s d £ s d 100 11 19 7 14 7 6 500 69 9 7 86 5 0 1000 162 18 4 208 8 9 2000 421 13' 4 560 12 6 5000 1772 18 4 2384 16 3
Permanent link to this item
https://paperspast.natlib.govt.nz/newspapers/ST19400628.2.21.2
Bibliographic details
Southland Times, Issue 24164, 28 June 1940, Page 4
Word Count
970WAR EXPENSES ACCOUNT Southland Times, Issue 24164, 28 June 1940, Page 4
Using This Item
Stuff Ltd is the copyright owner for the Southland Times. You can reproduce in-copyright material from this newspaper for non-commercial use under a Creative Commons BY-NC-SA 3.0 New Zealand licence. This newspaper is not available for commercial use without the consent of Stuff Ltd. For advice on reproduction of out-of-copyright material from this newspaper, please refer to the Copyright guide.