INCOME TAX

Daily Telegraph (Napier), Volume 58, Issue 205, 30 September 1929, Page 6

INCOME TAX

During the debate on the Governraent's taxatiou. proposals the wemher for Egmont declared, with quite remarkable eonfidence, that the incorae -tax is a tax upon, profits. Even if this wero true he should have said the income tax was a tax upon -some profits, because for a number of years profits made by the use of land remained untaxed. Even with that reservation the statement that income tax is a tax upon profits must be largely discounted. Allowing for the exemption of £300, many artisans and clerks and small sliopkeepers and professional men on a quite moderate scale have to pay income tax. With regard to the three first classes, whatever may be said as to the fourth, income tax paid bj them is a tax upon labour. In the case of the small sbopkeeper, who in the main supplies his own labour, he may be to some small extent taxed on profits', but he is mainly taxed upon his wages. This applies without any possible reservation to artisans and clerks who, if earning moi'e than the exempted income, undoubtedly pay income tax on wages. After allowing foi the statutory exemption, the taxable balance of every income oi £700 is £500. Eor incomes of £400 the ta-xable balance is £114. Eschewing rather stupid subtleties, these incomes are wages incomes-, and they pay income tax. The position might- be put more forcibly than i?hat, but in any case it is quite clear that it is absurd to make such a sw-eeping generalisation as that income tax is a tax upon profits.

Now let all this be lgnored. Let it be assumed, as the member for Egmont so breexily assumes, that the income tax is a tax upon profits, and then why should some profits pay the tax. while other profits are left untouched? If trading profits should pay income tax why should not the profits made by the cultivation of land pay it also? Under the circumstances, and in view of the exemption of £300 applying to all incomes however derived, it is pnpossible that in some cases wages should not be taxed, but that is no reason for saying that they are not taxed, and that the income tax is a tax upon profits. To concede the most1 of this it can only be admitted that the income tax is a tax upon some profits, and that profits made by the use of land escape taxation. This is one of the reasons why the Government proposes to make large landowners pay an increased land tax or else income tax, whichever produces the larger total. The country iaag suffered much owing to the injustice referred to. The deficit now to be met by increased taxation is largely or wholly due to the mistaken policy by whicb after the war landowners were relieved from liability to pay income tax, although all other earning and profit-making classes in.the community except that included in the £300 exemption were compelled .-to go on paying. And even this decision to relieve landowners from paying income tax was based upon a transparent pretence. "Eeform," which thrust this injustice on the country, pleaded that it did so because it considered' it unjust that landowners should pay both income tax and land tax. The suggestion here put forward was in plain language untrue. It was only rural landowners who were relieved from paying income tax because they also paid land tax. All urban landowners paying land tax had to go on paying it, and, in addition, paid income tax. Land tax revenue is less than a million and a quarter per annum (in 1927, the latest year for which the Year Book gives details, it was £1,138,259), and of this total nearly half was collected from business and other sites in the towns. If, as "Eeform" aileged, it was unjust that rural landowners, paying half the annual land tax total, should also pay income tax, how could it coneeive it just that •town landowners, paying the other moiety of the land tax total, should also be compelled to pay income tax? There is no reasonable answer to this. The faet is that "Eeform" was iiot concerned with justiee. It was maintained in power by the big landowners and had to serve its patrons. It did so by relieving them from payment of income tax. Now those patrons are -clamouring to be brought under liability to income tax again, provided that thev are not made to'pay increased land tax. To this the Ward Government replies that they shall either pay increased land tax "or? income tax, whichever is the larger. The average tax payable^ bv the owner of land of an unimproved value of £999 is £1 13s 2d per annum. To sum up, if an income tax is tc be considered just it should be a tax on all incomes above the general exemption of £300*