WAGE INCOME HIGHER

Taranaki Daily News, 3 June 1935, Page 7

WAGE INCOME HIGHER

EMERGENCY TAX RETURN REVIEW BY THE HON. S. G. SMITH. UNEMPLOYMENT fund surplus. £287,440 IN HAND AT END OF MARCH A matter of particular interest to the public which was dealt with at the last meeting of the Unemployment Board, was a report on the board’s finances as at the end of the financial year, 1934-35, said the Hon. S. G.. Smith, Minister of Employment, in a statement on Saturday. The annual statement to the board from its accountants is one to which the board always gives lengthy consideration, as upon it depends very largely the margin of reserve to which the board may look for funds with which to finance new policies in unemployment relief for the ensuing twelve months, and, what is still of urgent importance this winter, measures for providing some additional comforts for the unemployed during the cold season. “The considerations mentioned are of direct importance to those whose normal avenues of employment have not yet reopened after .the depression, but the board’s annual review, of. its revenue receipts are of interest also to the public generally on account of the clear reflections which it gives of recent trends in the economic position of taxpaying citizens throughout the Dominion.” remarked Mr. Smith. “These reflections are this year as pleasing as they are clear. “I regard the revenue from salary and wages-tax as a particularly direct and useful indicator of the current income position of the average citizen,” said the Minister, “for the reason that this tax is paid as and when salary and wages are received by the taxpayer. For this reason it gives, in my opinion, an even more close-up view of the situation than do either customs or income-tax returns, especially as the latter' is not payable by thousands of small wage and salary earners. ' £3,600,000 MORE IN WAGES. “Probably more often than otherwise, the Minister of Employment is concerned with unwelcome news, and I accordingly take special pleasure, in being able, on this occasion, to announce that, from the returns of salary and wages-tax for the past financial year, it is calculated by the board that a rise of £3,600,000 has taken place during the year in the wages hill of the Dominion. This deduction remains true in spite of the’apparently contradictory fact that the board’s revenue from that particular tax fell in the same twelve months .by £72,000 compared with the previous year. This reduction in tax and the estimated increase in earnings are, of course easily reconciled when it is recalled that during last year the rate of the tax was lowered from Is to lOd in the pound, and that from November 12 last, persons under 21 years of age were wholly exempted from it. The amount received into the . unemployment fund from this tax was £2,794,000. “Revenue from levy payments amounted to £414,000, which was £13,000 less than last year, the reduction being due to the fact that relief workers were granted last year the concession of paying levies of only Is instead of 5s per quarter. This tax being on a flat rate basis, the returns from it do not offer the same interest as an indicator of economic conditions as do those from the salary and wages-tax, although it provides a very substantial portion of the board’s revenue. “From the point of view of revenue into the unemployment fund, the most marked improvement is shown under the heading of returns from taxation on incomes other than salary or wages, which, after allowing for an item of £38,000, representing some revenue received in advance, amounted to £1,314,700, an increase of £200,000 over the previous year’s figures. The rate of this tax was also reduced in 1934 from Is to lOd in the pound, so that the rise in this class of incomes which was necessary to offset the reduction in tax and yet produce £200,000 more in taxation, clearly must have been substantial. The board calculates it to be £6,388,000, or an increase of 281 per cent; but satisfactory as this result is, it cannot be viewed, as a recent indication of the state of affairs with the taxpaying community, with quite the same optimism as is warranted by the salary and wages-tax figures mentioned earlier. It has to be remembered with due caution that the tax on income other than salary or wages is derived from incomes earned in the year before the tax is levied on it—in this case the year 1933-34—and it has to be borne in mind particularly that in that year there was a sharp rise in wool values which has not, unfortunately, been fully maintained since. CLOSER INSPECTION. “It is proper to mention too,” said Mr. Smith, “that the closer inspection now maintained by the board of payments due under the heading of salary and wages-tax and tax on ‘other income,’ has contributed in good measure to the improved returns into its funds. In this connection I might mention that it is found by the board’s inspectors that omissions to pay these taxes lie broadly with two classes of persons—those whose omissions are due to honest ignorance of their obligations under the Unemployment Act, and those who know but are prepared to risk prosecution if discovered. The board’s inspectors are, in the course of their duties, making the former class better acquainted with their obligations, and are bringing increased numbers of the latter type to the notice of magistrates for enlightenment. “I should like on this occasion to forestall what have come to be almost regular misunderstandings—not always accidental with some critics of the board I am afraid—about the surplus in the Unemployment fund, as published quarterly in the New Zealand Gazette. These gazetted returns are published by Treasury as a matter of departmental routine, and deal only with the purely cash position at the date concerned, taking no account of forward commitments, accounts due but not paid, revenue received in advance, the cost of measures which the board has under contemplation hut has not yet made commitments for, nor the need for maintaining a certain' reserve against sudden demands on the fund as a result of unexpected rises in unemployment registrations. It is obvious that if the board conducted its affairs so that at the last day of each quarter its outgoings precisely balanced its income, relief workers and the board’s various creditors for goods and services would have to face a very lean period until the next quarter’s revenue began to accumulate again, and that no funds would ever be available for.developing avenues of fulltime work at standard rates of pay. The following table sets out the year’s finances in the simplest possible form, which should leave no room for misunderstanding:— Cash balance carried forward £ from 1933-34 621,518 Add receipts from all sources during 1934-35 4,623,560 Total amount available during 1934-35 5,245,078 Deduct amounts paid out dur- .