XN000022-1979-02-28 — Page 18

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WEDNESDAY, FEBRUARY 28, 1979

FOUR TAX CONCESSIONS PROPOSED

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FOUR TAX CONCESSIONS WERE PROPOSED BY THE FINANCIAL SECRETARY, THE HON. PHILIP HADDON-CAVE, THIS (WEDNESDAY) AFTERNOON WHEN HE PRESENTED THE BUDGET FOR THE COMING YEAR.

ONE INVOLVED A REDUCTION FROM 15 PER CENT TO 10 PER CENT IN THE +CLAW-BACK+ OF THE SUPPLEMENTARY PERSONAL ALLOWANCE GRANTED TAXPAYERS IN 1976-77.

UNDER THIS PROPOSAL, THE SUPPLEMENTARY PERSONAL ALLOWANCE WILL NOW NOT DISAPPEAR UNTIL A SINGLE TAXPAYER EARNS $37,500 A YEAR (COMPARED WITH THE PRESENT $29,167), AND A MARRIED TAXPAYER $75,000 A YEAR (COMPARED WITH $58,334 AS AT PRESENT).

THE REDUCTION OF THE +CLAW-BACK+ WILL COST THE GOVERNMENT AN ESTIMATED $37 MILLION IN 1979-80.

MR. HADDON-CAVE ALSO PROPOSED TO SCRAP THE 30 PER CENT RATE APPLICABLE TO NET CHARGEABLE INCOME IN EXCESS OF $50,000 A YEAR, AT A COST TO GENERAL REVENUE OF $20 MILLION.

THIS WOULD MEAN THE TOP MARGINAL RATE FOR SALARIES TAX IN FUTURE WOULD BE 25 PER CENT ON NET CHARGEABLE INCOME IN EXCESS OF $40,000 PER YEAR.

THUS A SINGLE TAXPAYER WOULD ENTER THE STANDARD RATE ZONE ON AN INCOME OF $75,000 A YEAR, COMPARED WITH $70,000 AT PRESENT, A MARRIED TAXPAYER AT $100,000 (AS AGAINST $90,000 NOW), AND A MARRIED TAXPAYER WITH TWO DEPENDENT CHILDREN AT $117,000 (INSTEAD OF $104,000 AS AT PRESENT).

THE EFFECT OF THESE TWO PROPOSALS TOGETHER WOULD BE TO REDUCE THE EFFECTIVE RATE OF TAX PAYABLE BY A SINGLE TAXPAYER ON, SAY, $20,000 A YEAR FROM 2.16 PER CENT TO 2.06 PER CENT, AND ON $30,000 A YEAR FROM FIVE PER CENT TO 4.75 PER CENT BY A MARRIED TAXPAYER ON, SAY, $30,000 A YEAR FROM 0.96 PER CENT TO 0.92 PER CENT, ON $60,000 A YEAR FROM 8.33 PER CENT TO 7.83 PER CENT, ON $80,000 A YEAR FROM 13.13 PER CENT TO 12.5 PER CENT, AND ON $90,000 A YEAR FROM 15 PER CENT TO 13.89 PER CENT AND BY A MARRIED TAXPAYER WITH TWO DEPENDENT CHILDREN ON, SAY, $60,000 A YEAR FROM SIX PER CENT TO 5.5 PER CENT, ON $90,000 A YEAR FROM 12.67 PER CENT TO 11.94 PER CENT AND ON $104,000 A YEAR FROM 15 PER CENT TO 13.7 PER CENT.+

MR. HADDON-CAVE POINTED OUT THAT THE TOTAL COST TO THE REVENUE IN 1979-80 OF THE INTRODUCTION OF THE DEPENDENT PARENT ALLOWANCE, THE REDUCTION OF THE +CLAW-BACK+ OF THE SUPPLEMENTARY PERSONAL ALLOWANCE TO 10 PER CENT AND THE SCRAPPING OF THE 30 PER CENT TOP MARGINAL RATE, WOULD AMOUNT TO $126 MILLION, OR $77 MILLION IN A FULL YEAR.

ANOTHER CONCESSION INVOLVED INCREASING THE PRESENT ALLOWANCE FOR DEPRECIATION OF PLANT AND EQUIPMENT FROM 20 PER CENT TO 25 PER CENT. THIS WILL PRINCIPALLY BENEFIT THE MANUFACTURING SECTOR AND COST THE GOVERNMENT AN ESTIMATED $22.5 MILLION IN 1979-80. IN A FULL YEAR, THE COST TO REVENUE WOULD AMOUNT TO ROUGHLY $12.5 MILLION.