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Wednesday, 31 July 1946

 

1.   The figures shown in Schedules A and B are intended to illustrate the additional work imposed onthe taxation assessing staff under the present system rather than to suggest what the tax amount ought to be.

2.   Deduction for a spouse in Schedule B is retained at the same amount allowable for rebate purposes under the present law, i.e. -

(a)   Where taxable income exceeds £200 hut does not exceed £250, an amount equal to one-half of the taxable income.

(b)   Where taxable income exceeds £250 but less than £300, an amount equal to £100 plus half the excess of £300 beyond the taxable income.

3.   If it should be thought that two of the calculations shown in Schedule A could have been done mentally, it is pointed out that this might be so where the taxable income is between £200 and £250, but it could not be done where the taxable income exceeds £250.

Here is the progression of the complexities. First, we had a rebate system. Secondly, the social services contribution in its simplest form necessarily meant more work whilst . the consequence of section 160ad adds insult to injury. Whilst that section has no application to the higher grades of income, and, indeed, does not apply to certain of the lower grades, nevertheless it is a fearful business and must have application to very many cases.

The political expediency of adopting a separate social services contribution to placate low-income earners was not lost on the Government, but its political chickens have now come home to roost. The complexity of the separate contribution and the calculations it renders necessary place an added strain on the assessors of the Taxation Department, and one consequence is that an amount of approximately £50,000,000 of income tax in respect of previous years has not yet been even assessed. It must be obvious to everybody that this system requires the employment of many more experts, but even with such extra help the taxes are not being collected. The failure to obtain this income tends to keep taxation higher than it would otherwise be for the payasyouearn worker, on whom falls the major burden of keeping the Government supplied with revenue. But for the adoption of this system, a considerable proportion of the £50,000,000 that I have mentioned would undoubtedly be available from other people.







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