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10. The above amendments, and many others on matters of detail which we have incorporated in the draft Bill but which we do not propose to attempt to explain in this Report since they are explained in the Table of Correspondence attached to the Bill, would in our opinion result in a more equitable distribution of the burden of war taxation. It is estimated that they would result in the following increases or decreases in revenue :—
Increase.
Salaries Tax
Decrease.
$80,000
Business Profits Tax
Interest Tax
$ 650,000
$1,000,000
Net Increase
$1,570,000
11. Taking the estimate of yield for 1941-42 at $9,300,000 if the present War Revenue Ordinance were to continue unchanged, the adoption of the amendments mentioned above would bring in a further $1,570,000 raising the total to $10,870,000. Since data collected by the War Taxation Department indicate that profits generally have risen it is not unreasonable to put the total yield at the round figure of $11,000,000. This sum, however, falls considerably short of the amount which the Financial Secretary had advised us was necessary, and we had next to consider how additional revenue could best be found.
12. We came to the conclusion that the extra amount required could best be obtained not by the imposition of new miscellaneous taxes, the yield from each of which would be comparatively small, but by raising the basic rates of all five war taxes. On basic rates of 5% and 10% the estimated yield was $11,000,000 so that raising the basic rates to 6% and 12% would produce an additional one-fifth or $2,200,000 and raising the basic rates to 7% and 14% would produce an additional two-fifths or $4,400,000.
Rates.
5% and 10%
Estimate.
$11,000,000
6% and 12%
7% and 14%
$13,200,000
$15,400,000
The first alternative (6% and 12%) would produce rather less and the second alternative (7% and 14%) rather more than the additional sum which the Financial Secretary had advised it was necessary to find; taking into consideration the healthy state of the Colony's surplus balances and the estimated annual yield of at least half a million dollars from the recently imposed duty on Toilet Preparations we finally decided to recommend that the basic rates be raised to 6% and 12%. The estimated yield at the old and new basic rates can be set out in detail as follows:-
At 5% and 10%
At 6% and 12%
Salaries Tax
1,200,000
1,440,000
Property Tax
2.300.000
2,760,000
Corporations Profits Tax ...
4,700,000
5,640,000
Business Profits Tax
1,800,000
2,160,000
Interest Tax
1,000,000
1,200,000
11,000,000
13,200,000
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