"TAXATION OF ASSETS"

Press, Volume LXXIV, Issue 22504, 12 September 1938, Page 8

"TAXATION OF ASSETS"

Effects of Social Security Scheme CRITICISM BY CHAMBERS OF COMMERCE “From taxing wages for the purpose of its social security scheme, the Government, by its decision to levy company profits at the rate of Is in the £ for the same purpose, has moved on to taxing assets,” says a statement by the Associated Chambers of Commerce of New Zealand. “An important and prosperous company is quite obviously an asset to the State and to the community. Companies are responsible for the greater part of the industrial and commercial activities of the people. They have been closely identified with the growth in the standard of living. They consist not of a few rich men, but of thousands of citizens, men and women, who have practised thrift and invested their savings by pooling them in companies. The political view seems, curiously, to be that these concerns are legitimate subjects for prey; that the more efficient they are, the more they expand their operations, providing commodities and services for the people, securing rewards for the thrift of their shareholders, multiplying employment and the distribution of wages, the stiffer must be the taxation.

“Taxation on company operations in New Zealand has, by this latest addition, soared to a point never previously contemplated. It means a heavy penalisation of enterprise, of business capacity, and of good management. It means that as earnings rise through incentive and efficiency the Government! demands—and takes —a major part of additional profits instead of allowing the company to accumulate reserves, and to use their resources for further development, further production, further employment, further distribution of wages and salaries, and further diffusion of benefits among the whole population. “Capital Uriven Abroad” “The system is plainly at fault that deliberately inflicts such a serious disability on progress, and imposes such crushing burdens on co-operative effort and joint enterprise. The investment and employment of capital for industrial and commercial development is discouraged, or actually repelled. With taxation on companies at this abnormal level, in comparison with Australian rates, for example, it is hopeless to think that capital will be attracted for the exploitation of the resources of this country, present and potential; the tendency »will be for capital to be driven to seek avenues abroad, where it is not subjected to such punishing penalties. “Prospective overseas investors, contemplating putting capital into productive enterprise in the country, are faced not with welcome and encouragement, but with a barbed-wire fence and the certainty that the State, which shares none of the risks of enterprise, will step m and take the largest portion of any profits that are made; hence overseas capital goes elsewhere. Consequently, it becomes legs than ever likely that the value of the Dominion’s national production will grow to the extent that will be necessarary to support the growing costs of the social security scheme of the Government as at present drawn. Courage and energy cannot overcome the evil - effects of excessive taxation, which are shared by all, inescapably. “Attack at Both Ends” “At the same time as this exorbitant tribute is being levied upon co-operative enterprise, the Government is also stepping up, by means of the increased wages tax C which must be increased still further in due course) the taxation or' the individual incomes of the people to record levels, thereby diminishing those resources of the people that would otherwise have been free for investment in commercial enterprise. Thus the co-operative development of the resources of the country is attacked at both ends . at the point of investment and at the point of reward. Companies, which are performing a service to society, are being treated as if they have committed an offence against society. Nothing could be more absurd, or more detrimental to public well-being. • “The Government, in its desperate efforts to find ways and means of raising money for that social insurance scheme by which it hopes to improve the standard of living, is, by its taxing methods, following the path that leads most quickly to a reduced standard of living.