WAGES TAX TO BE DOUBLED

Southland Times, Issue 24164, 28 June 1940, Page 4

WAGES TAX TO BE DOUBLED

NATIONAL SECURITY CONTRIBUTION SALES TAX LEVY RAISED TO 10 PER CENT. A direct national security tax of 17in the £1 on all income calculated on the same basis as for social security was announced by the Minister of Finance (the Hon. W. Nash) in presenting the Budget last evening. For the balance of this financial year he estimated that it would yield about £6,000,000. Mr Nash said that the man with £2OO a year would pay £lO in national security tax while the man with £20,000 a year would pay £lOOO, this, of course, being additional to what he was required to pay in income tax and surtax. In fact, any individuals with such an income would, if it was all income from investments, have to pay in direct taxation no less than. £16,427 18/4.

A national security tax of 4/- to 5/a week might impose some degree of hardship upon families with several children on incomes of £4 to £5 a week. To counteract the possibility of hardship, the Government proposed to amend the Social Security Act by extending the family benefit to cover the second and each subsequent child instead of the third and each subsequent child as at present.

SALES TAX RAISED “It is also proposed,” said Mr Nash, “to double the present rate of sales tax, making it 10 per cent., and to credit the extra revenue (estimated at £2,000,000 for the balance of this financial year) to the War Expenses Account. If by all these means £14,120,000 is obtained from taxation for war expenses, it will be necessary to borrow £3,630,000 for expenditure in New Zealand and £19,750,000 for expenditure- overseas.” In addition to loans in a form suitable for ordinary investors, provision would be made to enable the rank and file of the people to do their part by subscribing small amounts at regular or irregular intervals as best suited them. This would be done through the introduction of a National Savings Scheme operated in conjunction with the Post Office Savings Bank. To augment the revenue of the War Expenses Account it was proposed to introduce a new scale of death and gift duties designed to provide a further £750,000 per annum, or approximately £400,000 for the balance of this financial year, said Mr Nash. The new scales reduced the exemption from estate duty from £lOOO to £2OO and from certain succession duties from £5OO to £2OO. The new maximum rates would be 50 per cent, for combined estate and succession duties in the case of estates of £70,000 and over devolving upon the widow and children, 55 per cent, when left to father, mother, brothers, sisters, nephews, aunts, and uncles and other blood relations within the fourth degree, and 60 per cent, when the successors were relations outside the fourth degree or were strangers in blood, including charities. Including the revenue diverted from the Consolidated Fund and the equivalent of the extra onethird payable to War Expenses Account under last year’s legislation, the total amount payable into this account from death and gift duties for the current financial year was estimated at £3,000,000. In addition there would be £500,000 from postages, and £720,000 from various Customs duties under last year’s special war taxation provisions.

MORE REVENUE REQUIRED All these items with £1,900,000 from the 15 per cent, super tax on income tax would produce a total of £6,120,000, but this'fell far short of the £17,750,000 required to cover estimated defence expenditure in New Zealand, quite apart from what was required for maintenance of the forces abroad. Accordingly, the Government had reached the conclusion that this yield from taxation must be at least considerably increased. It was not possible to do this except by forms of taxation that would reach practically every one in the Dominion. In any case every one was vitally concerned in the outcome of this war, and, therefore, should make some appreciable contribution towards its cost. The Minister added that provision for loan contributions by large investors would be made by the issue of loans with a currency of 10 years or more for which Government stock would be issued in the usual manner. In the circumstances the Government considered that these loans should be regarded as contributions to the war effort from the material assets of those with property and should accordingly be free of interest for a period of three years or until 12 months after the conclusion of the war and thereafter for 10 years at a rate of interest not exper cent. It was the intention of the Government to formulate for the consideration of the House a procedure under which all who had means would be required to assist by subscribing to loans. Those who already had voluntarily lent money free of interest could have the amount already subscribed taken into account in determining their total liability under this heading.