The Waikato Times With which is incorporated The Waikato Argus. SATURDAY, AUGUST 9, 1919. INCOME TAX

Waikato Times, Volume 91, Issue 14133, 9 August 1919, Page 6

The Waikato Times With which is incorporated The Waikato Argus. SATURDAY, AUGUST 9, 1919. INCOME TAX

The Acting-Minister for Finance lias a very pretty taste for staL'sliijs, which the country would do well to encourage, for information on financial questions is the first step towards efficiency. The particulars which he has lately published concerning the income tax are interesting, and if such statistics are compiled annually and made available they will afford the readiest method of gauging the country's advance. Hitherto the figures have not been compiled so exhaustively as has been done this year, and we are, therefore, unable to make a close comparison, but such figures as we have bear out the statements we made recently to the effect that very many persons had secured an increased income owing to economic changes. Tin 1 first item available is the number of those liable to income tax, but with incomes less than £OOO per annum, ami this has risen from 93G5 in 1910-11 to 21,250 in 1917-18. Mr Myers remarks- that this is due to increased salaries and increased proflls, but without further particulars it cannot he decided how much is due to each cause. The rise in salaries would probably be approved by the same people,, who would disapprove the increase in profits, but such 'a view is inconsistent, for the result is in. eacli case due lo the same causes. It is noticeable Hint although an increase is shown in the numbers of each class up to over £ 10,000 per annum, such increase is not proportionate to that shown in the lowest class, in which it is, no doubt, due to the entrance of a large number who have recently joined the ranks of in-

come tax payers. In the statistics for 1917-18 wo have the figure for income tax payers whose assessment is under £GSO, and it is interesting to note that the total of such incomes is greater than that of any other class, and is not even approached until we come to the lordly company of those with £IO,OOO per annum and over. This, of course, corresponds with the experience of the Old Country, where the bulk of the assessable income is found by those of small and moderate incomes. The unduly swollen income of some financial magnate serves for 'a text in a Socialist discourse, but would not go far to relieve poverty if divided amongst the mass of the people. It is not sufficiently realised that the exponents of high finance who are often quoted as influencing the councils of statesmen are commonly the managers of institutions such as banks, which gather together the cash balances of immense numbers, many of whom are keenly suspicious of the action of financiers. It is difficult for outsiders to estimate the real significance of finance in politics, and on the whole it is probably safe to say that while it is potent in normal times, it ceases to count when great causes move mankind. We have found in recent experience that the State has had to support both banks and insurance companies, in order to preserve credit. By far the largest amount of income tax is paid by companies, which is one more proof of the supremacy which this form of combination has assumed in the business world. This raises again the question of the fairness or otherwise of taxing the company instead of the shareholder who receives the dividend. There is much to be said against the present system, and a protest lately been made that a shareholder whose income is .insufficient to make him liable for income tax, may yet pay 7s 6d in the £ because that income is derived from a company taxed at this rate. Our objection to the present method of taxation would arise from very opposite reasons. A company whose income is large enough to bring it under the higher rates of taxation is either actually or virtually a monopoly, and fixes its charges at such a figure as ensures the customary dividend to its shareholders. The tax is, in fact, paid by the' customers of the company, and the fortunate shareholder escapes taxation altogether. The process is perfectly familiar with gas companies, whose charges are arranged to provide the usual dividends. Insurance companies and banks occasionally claim credit for their large contributions to the State exchequer, but such contributions have not. .reduced their dividends. It would, we hold, be fairer to assess the individual shareholder, for that would remove the temptation to raise the charge to the public to cover the demand of the taxcollector. Treasury officials have always resisted any suggestion of the kind; in the first place because of the great convenience in obtaining the tax at its source. They find it much easier .to collect a Smaller number of large payments from companies than a large number of smaller payments from shareholders. Then, again, it "will be contended that the country will lose the large payments of super-tax. It is, however, impossible to say whether the State would be a loser or not by the proposed change. There would be fewer payments at 7s Gd in the £, but a vastly increased number of super tax payers at the lower assessments. It is certain that if income tax remains our chief source of revenue, as seems likely to be the case, that we shall hear more of the question in time to come, and it is all to the good that thought should be directed to the problems involved.

The great alteration in the value of money has removed the necessity for one change, which we have in the past advocated. The limit of £3OO we held in pre-war times to be too high, as many of those whose income was between £2OO and £3OO were quite able to pay the small assessment which would fall on them. The altered value of money has, however, changed this and the figure of £3OO is brought thereby much nearer to a fair standard. It should not bo forgotten that direct taxation makes for economy and stability. If every wage-earner in the country paid income tax, Bolshevism would have no terrors for us. Indirect taxation falls with peculiar severity on those with small incomes, and the Treasurers of the future will have to compile their budgets with that aspect kept carefully in view. Income tax is likely to be their sheet-anchor for many years to come, and it ;s of the utmost importance that its incidence should be fair, for it can scarcely be pleasant.