TAXATION PRINCIPLES.

Press, Volume LIV, Issue 16157, 11 March 1918, Page 7

TAXATION PRINCIPLES.

CHAMBERS OP COMMERCE

SUGGESTIONS.

SIR JOSEPH WARD'S REPLIES.

Sir Joseph Ward. Minister of Finance, on Saturday handed to a "Press" reporter copies of correspondence which has passed between him and the Canterbury Chamber of Commerce and the Association of New Zealand Chambers of Commerce, in reference to taxation principles and incidence.

On March 4th the secretary of tlie Canterbury Chamber of Commerce wrote as follows: —

"At the quarterly general meeting of members of this Chamber, held on Wednesday last, the resolutions passed at the annual meeting in August last were re-affirmed, and I am directed to ask your consideration of the same, and the favour of a renl- thereto. I quote the resolution for /our information. —'That the Government be recommended to forthwith appoint a Royal Commission to enquire into tho proper principles and_ incidence of all taxation in New Zealand, and to make recommendations as to all the taxes, whether direct or indirect, to be levied for the financial year commencing July Ist, 1918.' " On Friday, March Bth, Sir Joseph Ward replied as follows:— "I have to acknowledge the receipt of your letter of the 4th instant, conveying the resolution passed by your Chamber of Commerce at the general meeting held last week. In reply, I forward for your information a copy of my letter to the secretary, the Association of New Zealand Chambers of Commerce. With reference to tne resolution proposing that a Royal Commission be appointed to suggest a system of taxation for the financial year commencing July Ist, 1918, such a course would not at present be of any service from a practical standpoint. I am ready at all times to receive consider any practical proposals that will produce the huge (for this country) revenue required largely tor war purposes in the fairest and most «quitable method possible. I regret, however, to say that many suggestions I have received cannot be entertamod by me for the reason that they invariably propose sectional relief that, if adopted, would fail in the most vital part of producing the revenuo imperatively ttecessarv. At the conclusion of the war, when wc know what our permanent annual financial responsibilities are, a re-casting and readjustment of our finances, where practicable. will be necessary." , . . , The letter from the Association of New Zealand Chambers of Commerco, dated February 26th, was as follows "I am directed by my executive to forward to you copies of resolutions which wero "adopted at the Conference of Chambers of Commerce hold towards the end of last year, on the subject of lan'd and income taxation in New Zealand. lit August last you wero good enough to receive a deputation from this Association, which pointed out various objections to tho present method of taxing tho incomes of companies. The feeling is almost universal among tho business community that tho present system of taxing tlio incomes of companies is operating harshly ill many cases, and that steps should be takon to set up soino authoritative board of enquiry to investigate tlie present systom •of taxation, and, if possible, to recommend a more equitable one. If it is thought inadvisable to entirely remodel the present system during tho tt'ai* period, it is felt that at least something should be dono to remove some of the exisiting anomalies. The resolutions • which %vere adopted (copies of which are attached) advocate (1) tho setting up of either a small committee of enquiry or a Royal Commission; (2) amendment in the presoilt mothod of taxing ineotnos of joint 6tock companies; (3) amendment of tho present statutory provision regarding compulsory contributions to war loans, and (4) the desirability of profit-earning departments of the State and all local bodies being mado liable for income tax and land tax in respect of their commercial activities. In bringing the resolutions to your notico I -was directed respectfully to express the hope that.you will consent to the appointment of a board of investigation. 111 oM hardly say that the amount of taxation which is required at this time is not in question. Tho matter at issue is the inequalities even among the same class of taxpayers which arise from existing systems'" iSir JdsGfih Ward replied as follows ort March 2nd

"I have to acknowledge receipt of jour letter of 26th ultimo, conveying the .resolutions passed at a rccent meeting of your Association on the matter of taxation and contributions to war loans. In reply, 1 have to advise you that I am perfectly willing to consider any representations in these matters that may come from yout- Association, and am of opinion that the proceedings recommended in the second paragraph .of tho resolution No. 18 (c) will be the most convenient one to adopt. I caniiot, hoWevef, consent to any committee of tho Association having access to the records of the Land and Income Tax Department, as this would be contrary to the provisions of the Land and Income Tax Act dealing with secrocv on matters relating to income tax. I have no doubt that any committee of jour Association could obtain all information noccssary with reference to taxation of companies in other countries without reference to the Land and Income Tax Department, mth regard to the resolution dealing with compulsory contributions to war loans, I liavo to inform you that the provisions of the Finance Act, 1917, permit the Board that has been appointed by that Act to deal with the points mentioned in your resolution as to the taxpayors' ability to contribute, and_ aro such as will prevent any inequity in the administration of the provisions of tho Act. In the pamphlet accompanying your letter I notice a reference to the English system of company taxation, and will be glad to know the authority for the statement, that there is provision in England for the romission of an amount representing the difference in the rate of tax at which the company has paid, and at which' the shareholder should pay on his ownjacome. lam advised that m England no nerson in receint of an income in excoss of £700 is entitled to any remission or rebate, and that the procedure there is that the companies pay tax on tho income shown in their returns, with the power of deduction from the rlivir] PJl d s . „ m j f i }nt m addition the individual shareholders in receipt of income over £3000 ore required to include in their roturns the amount of dividends reooivprj, an j pny snpor-tnx thereon, in addition to "the tax nwd by the company. T», c statement in the pamphlet -woiiM. appear to he somewhat misleading.'' '