1962 assessments for the United Nations regular budget as of May 31, 1962-Con. 1 Credits resulting from (1) the Tax Equalization Fund ($6,010,270), and (2) the transfer of League of Nations assets ($649,466). 2 Credits from adjustment of advances to Working Capital Fund ($791,224) and cash receipts ($15,752,936). Allocation of assessments between Syria and the United Arab Republic to be determined by the General Assembly. 3, 475 4,421 41, 544 174, 765 26, 175.00 1,336, 204 30, 764 785, 714 3,475 14, 656 49, 382 3, 537 51,826 6,659, 736 17, 370, 045. 17 APPENDIX 12 1962 assessments in respect of the United Nations Emergency Force special account for the period Jan. 1 to June 30, 1962, as of May 31, 1962 1962 assessments in respect of the United Nations Emergency Force special account for the period Jan. 1 to June 30, 1962, as of May 31, 1962-Continued 1 Reductions in assessments made possible by voluntary contributions, principally from the United States. For text of resolution see appendix 19. 2 U.N. staff assessment and U.N. Tax Equalization Fund: When the U.N. Secretariat was set up some employees had to pay national income taxes and other employees did not. To provide equitable treatment to all employees, the United Nations reimbursed the national income taxes paid by its employees so that all had equal take-home pay for equal work. The Convention on Privileges and Immunities provides, among other things, that the ratifying governments grant an income tax exemption to citizens employed by the U.N. The United States has not ratified this convention. The major congressional objections to the convention were that the income tax exemption established a tax-free class of society and reduced U.S. Treasury revenue. In order to meet this U.S. objection, the U.N. established its "staff assessment plan." The staff assessment is a levy against all U.N. employees. At first the rate was equivalent to the Canadian income tax, which is slightly higher than the U.S. income tax rate. The current rate is still somewhat more than the U.S. income tax rate. The staff assessment is withheld from each employee's gross salary and is deposited in the Tax Equalization Fund. Initial procedure Funds collected from the staff assessment were classified as miscellaneous income, which income was used to reduce the amount members are assessed toward the support of the U.N. Since the U.N. continued to reimburse its employees for national income taxes which they had to pay, that outlay was an expense of the U.N. and included in the U.N. budget. Later events After a few years, all countries, except the United States, had either ratified the convention or made other arrangements to relieve their nationals of income tax liability. Since the tax reimbursement costs were a part of the U.N. budget costs, the other governments complained because they were providing two-thirds of this item which went into the U.S. Treasury. The present procedure To meet this objection, and to afford equity as between member governments, the following procedure was put into effect and is used at present: The Tax Equalization Fund is no longer deducted as miscellaneous income to arrive at the assessment budget. Instead, the Tax Equalization Fund is prorated to all member governments according to the scale of assessments. For those governments that do not impose an income tax on U.N. employees, their equity in the fund is credited against their annual assessments. For the United States, the only government that does impose an income tax, its equity is used to reimburse American employees for the income tax they have had to pay. The tax reimbursement cost is no longer an item in the U.N. budget. |