FINANCE AND COMMERCE

Press, Volume LXXIV, Issue 22509, 17 September 1938, Page 15

FINANCE AND COMMERCE

PROTEST AGAINST TAXATION

SOCIAL SECURITY CONTRIBUTION

KAIAPOI WOOLLEN'S ANNUAL MEETING

Shareholders in the Kalapoi Woollen Company passed a motion at the company's annual meeting yesterday prott&tofe against the social security tax to be imposed on the profits of limited liability companies. The motion, which was moved by Mr T; N. Gibbs and seconded by Mr It. Bush, was as follows: —

"That this meeting of shareholders I t»f the Kaiapoi Woollen ' Manufacturing Company, Ltd., in annual meeting . assembled. representing shareholders with an average holding of 330 shares, having a marketable value of £l5O, desires to enter an emphatic protest against the social security -tax as imposed- on profits of lin ted liability companies and which, L the case of ordinary shareholders o.' this company, equals 2s 7d in the £l,-from their dividends, and points out that this tax, in addition to land arid income tax, places a burden on the Industry this company is engaged- in-which it is practically impossible to carry, and which, generally, will have serious effects on industrial production wlth/in the Dominion." ■

The meeting asked that this protest be sent to the Prime Minister (theTßt. Hon. M. J. Savage) and the Minister lor Finance (the H6n. W. Nash). In his address to shaneholders, the ctairman, Mr Arnaud McKellar, said: The directors regretted the ' surplus : was not as large as it was last year owing to further increases in costs and • some considerable recession in trade* which occurred during the latter part of the year. Another factor adversely influencing the balance-sheet was the contraction which occurred in tee wool clip of the Dominion last:year. After providing £SOOO for depreciation > the directors proposed to distribute 5 per cent to preference shareholders and 4 per cent to ordinary shareholders. "Compared with the previous year, gross profit has declined by £6464." Mr McKellar said, "but it is a matter of interest that, the_gross profit'this. year is £4O >-.highervthan it was in 1936, and with expenses as they then were the surplus that-year was sufficient to provide full dividends en both classes of shares and permit of carrying to special reserves t £7500.': "The increasing costs of operating the company are causing your directors considerable concern. Apart from heavy increases in the manufacturing accounts during the last two yf* the .increases in expenditure in the trading div|sion have reached the enormous *• total" "of £ 12.093. The amount paid in graduated land and > income tax last year was £11,708 12s 6d.

•In the event of the Social Security Act coming into operation, the com- ' pany will have to carry a further and unexpected burden in the social fe- • *«"*&. tax, which on the third reading of the bill was made applicable to companies. If the tax becomes applicable, we propose to pay it by deducting the amount of it from dividends, s th?S ii*!n e - 0 * mio ?,-^ our directors tnat rigidly controlled commerce will shlrS* I**-1? 1 **-1? |he of tee shareholders of our company. The increase in wages and other expenditure S*,S# favourably reflected in output; £3* "soma divisions of the com- 1 -KS business the.position is assumnou&, Proportions. With the £!£& woTjanK-wattk and the general' conditions as they are to-day the 225- M /»°t encouraging. The serious decline in greasy wools also we admit nas had some effect on the results of .tee year now being reviewed. From tee extremely favourable 'price level . which the grower received for his clip toe previous year prices fell last year abruptly to a level which could not be regarded as satisfactory; and, when such a steep decline occurs in one-year, it is exceedingly difficult for the company to recover from iti productions tee prices paid for wool the previous year. '-...'-

- "A glance art the Dominion's statisfact *"■* both **» the United Kingdom and Australia tremendous increases have taken place in importations during the year, and woollen goods have shared very considerably in these increases; the increase from the United Kingdom being equivalent to 30 per cent, over the previous-year mid 50. per cent compared with the figure of two years ago. The increases as far as Australia are •oncerned are approximately the same. "The result, of this has been that in' order, to/retain a reasonable share of the market for our productions'it has been. necessary to many instances to absorb a considerable portion of the increased trading costs. This is un-» desirable and uneconomic and it behoves the Government which enacted the legislation which created this position to. correct it by the' means they have at its disposal, and it will be necessary to do so at an early date Jf unemployment is not going to become rile throughout the Dominion in oiir industry. ~. - .

"Intolerable Burden"

Tins aspect fa serious, but the excessive- taxation which New Zealand companies are now asked to bear'is even more serious still. In an earlier Portion of this report I have referred to the 1938 accounts. From the point or view of turnover this was a normal year, and although taxatfqn was then heavy it was possible to carry on at . this figure, but the increases which aave occurred since have t made the ourden _ intolerable to manufacturing companies such as ours. / n ."Gross profit in that particular year approximated the gross profit this r year and there' was a reasonable margin left for shareholders. If our company was operating to-day with the same turnover in either New-South Wales, or Victoria, there would, also be an ample margin for shareholders, an .S when it is remembered that not a mtle of cur competition comes from Australia the position we are labour•?i?.T Und , er . the th e present timeiin New Zealand is not just. 'Before the 1935 election we were advised that if elected to office the Vabour Government would give more consideration to manufacturing inaustnes in the' Dominion. As late as ♦II s * week a prominent Minister of *u • C 2 wn is credited as having stated: « is .the policy of the Government to promote our secondary industries to the maximum degree.' Up .to the present the Government has hot'fulfilled £fj£ re ~ e J ection promise but has emv oarrassed our industry by surrounding sImISi one rous conditions, greatly aaaed to the production costs, and by tne alarming increase in taxation is now taking out of the enterprise a sum almost equal to that paid to shareholders by way of dividend—and this i^ out nsk of capital.'' M* T. W Lewis, who seconded the motion, said that this was the diamond juouee of the company—an event in '■■ life of ~ directors regret that they are, ; «?1 ab /. c .t° recommend at least the 4 i£ m u divi ! ie . nd M last vear » especially :*■ 51.+ ? u, ? lle e year.: but our 'sleeping & Sri er * the Government, is taking &, *> large a toll from us," he added. SC' ' ■"■ ''.■."' ' ■":'■

"Nearly Halt the Profits" "In fact we arte'paying to the Government nearly half the profits, and much more still if we have to pay the National Social Security Tax It must be disquietening to shareholders to feel that the taxation proposals dip into such a very large amount of tr*_v profits that the company makes. ' +^lf n * he woollens and textiles' Australia is a real menace" to this Domin- ™ "+r, 5 - s * ll -*. is , well equipped and in -i£ s with plenty of capital, with an area which gives them 'every opportunity of (producing in massed production. We are very circumscribed in this Dominion. i 5^ re u are a g l eat m any mills operating and this produces very keen competi-

v., Y ei 7 i L lttle , has been d one on the part of the Government. An imposiS?i? & ?-, percent - du *y on piece goods and textiles was made some six months ago, and is no help whatever to the industry m this Dominion, with the increased costs now imposed upon it which, in the production divisions alone last year were £19,000. Under the awards made more or less recently 1 we will have to provide another £BOOO at least—probably £IO,OOO in the mills alone, and in addition to that we have to provide £SOOO for no work; that is for. extra holidays which we have to give- over and above statutory Holidays. •;. .-..-• r "Australia is working on. about a 40 per -fceht.-less production cost and their, taxation is -2s ltd. so that you can see how much caller-it provide dividends pyer;,r there: .qSie ; only salvation to : ithe -situation is a reason-able-measure-of protection by the Government; Overtures have been repeatedly made: direct to the Minister for Industries and Commerce, and we beUeve that • he-is. more or less sympathetic, but there seems to be a barrier somewhere. Unless reasonable protection is granted. I .do not see a bright future, for. the. industrial companies in this Dominion who have to meet this competition.":Mr T. N. Gibbs offered commiserato shareholders on the disappointing results "especially in view of the so-called genera! prosperity that is betne built un in New Zealand." The company's balance-sheet showed a net profit of £12,642 . after paying land and income taxes amounting to £11,708," he said. "For income tax purposes the company is assumed to have a profit of £24,000. The State takes in land and income tax just on 10s in the £ as ita share. The Social Security contribution is likewise charged on the same £24,000, notwithstanding the State has already appropriated half of the company's earnings. In, effect,' then, the tax is 2s in the £ oil shareholders' share of earnings. ,' - Small Holdings . "This company has 1350 shareholders and-the average holding works out at 333 shares; equal to £228 of paid-up ' capital—market value at end of last month about . The: shares are thus held in small holdings and obviously mostly by persons of moderate means. "Yet this tax is imposed in such a way 'that-' these persons' are to the £ for Social Security. This is not fair and equitable dealing.

"It will be 2s 7d in the £ on ordinary shares, as the preference shareholders will receive their fixed dividend, which in,, effect,- exempts them "from .payment.* Why l could not the dividends be taxed in the hands of the shareholders or even make the company agent for the purpose of deducting the contribution of Is in the £ when paying the dividends out? "In the case of this company it has just announced a dividend to its' ordinary shareholders of 4 per cent., and is drawing slightly on carry forward to pay it When this tax is applied on the same profits the company would only be able to. pay 3 per cent—the rate of Interest ? which' is payable on the Savings Batiks, where money is supposed to be deposited without risk. Can the Government expect the public to finance undertakingsTfor a 3i per ?«eht return? " : ■ ' ?irs . "If J ;:pi:esent industries, cannot be madejmbre prosperous and if large accumulations of small capital into companies is thus to be penalised and discouraged, it can be said with all confidence that production will not increase fin this Dominion and that the Government's Social Security scheme is being constructed on foundations .that will crack under the strain. Instead of security we will be faced with' insecurity,'* said Mr Gdbbs.' ' Mr J.' Tait said that, after hearing Mr Gibbs "he thought that all would be very grateful to get 4 per.cent, this yean "The l -sition is very disquietening, there is no -question of that," he 'said. "The only consolation is that we are all in the same box." Mr • R.' Bush: It would be as r well to let shareholders know how -' serious things are.* Mr W.S. Newburgh suggested that Mr Gibbs frame'a motion embodying the figures he had given and that the meeting enter an emphatic protest. The directors retiring /"by rotation, Messrs T. W. Lewis and G. W. Armitage, were re-elected, and Mr W.- S. Newburgh was, appointed auditor. ; On the motion of Mr J. Tait, the usual vote of thanks to the chairman, and directors and staff was carried.;'. [Extended Report Published' by Arrangement.]

MINING

MARTHA

INTERIM DIVIDEND OF .9d

(rUESa 4SBOCUTIOH tslbobam.) AUCKLAND, September 16. , Cabled advice has been received, by Mr H. G. Milligari, local director and attorney for the Martha Gold Mining Company (Waihi), Ltd., that the directors have declared an interim dividend of • 9d a share, free of income tax. , ' ~■-■■

It is payable on November 1,

MOONLIGHT

The Moonlight Goldfields wash-up on September 15 was 126.95 oz for 400 hours' sluicing. ; . '• ,»-•■'•'' .;■■--. -,.;£• NEW RIVER

The New River return for the week ended September 15 is 430 z from 7000 yards 1a 101 hours. . - t WHITE'S ELECTRK?'

White's Electric return for the week ended September 15 is 21oz from 9000 yards in 124 hours. : \. ; .

PRICE OF GOLD FALLS

BY 8d

LONDON, September 15* , Gold to the value of A 1,313,000. was sold at-.'£7 "'4s' 3d, "a*, reduction of 8d on yesterday's price. Silver, is quoted at 19 9-16 d an ounce spot and 19§d forward;

TALISMAN DUBBO

; Talisman Dubbo Gold Mines, Ltd;, report that a second parcel of 100 tons of.low grade ore for sweetening : .mill was treated for,a return of £98..--

CANTERBURY

LITTLE ACTIVITY IN ANY SECTION

/ (BY OCR COMMERCIAL EDITOB.) " *"

Friday Evening.

There has been little change in the' Canterbury grain and produce" markets since the last report; Chief interest continues to be in potatoes, but actual business is negligible. The local market is in exactly the same position as it was before the recent announcements of. further . exports to South America, with the- nominal price at £1 10s a ton on trucks, sacks extra."»' ' "' ' _ . > I The. warmer weather of ' the last week has caused an/ easing in the demand for chaff and the quotation has receded-sightly to £4 5s a ton.

There : is little activity in small seeds and other markets are unchanged. Quotations

The following are the prices quoted to farmers on trucks at country sidings, unless otherwise indicated:— Wheat —Milling, f.0.b., September, Tuscan 5s lid, Hunters 6s Id, Pearl 6s 3d.

Oats—A Gartons to 2s 10d, B Gartons to 2s 6d, Algerians 2s 9d to 3s. Ryegrass—Perennial 3s 9d. Italian 2s 9d to 3s.

Cocksfoot—Plains 8d to 9d, Akaroa 8d to 9id per lb. Cowgrass—6d to /d per lb. White Clover—9d to Is per lb.. Potatoes —£1 10s a ton. Chaff —£4 5s a ton.

Barley—Malting 4s 7Jd. feed 3s a bushel.

Brown top—M.d., 9d to lOd per lb.

Partridge Peas—4s 3d to 5s 3d a bushel.

Bran —Large £4 15s, small £5 ss. Pollard—Large £6 5s a ton, smal £6 15s.

ASHBURTON

Grain, seed, and produce merchants report a quiet period on the Ashburton market. No section of the trade has been particularly active. Farmers are still sowing wheat in some districts, but the demand is chiefly for seed oats, barley, and peas.

Dakotas • suitable for export are in strong demand at £3 a ton on trucks, sacks in. The chief difficulty is in obtaining lines that conform to the grade required. It is probable that the market for ordinary grade will firm as a result of export business. Good retail business is reported in ryegrass, clover, and cocksfoot. The following are prices quoted to farmers, on trucks at country stations unless otherwise indicated, sacks extra, free of commission:— Wheat Milling Tuscan 5s lid, Hunters 6s Id, Pearl 6s 3d. Fowl wheat 5s lid (all f.0.b.). Oats—A Gartons 2s 9d, B's 2s 6d; Algerians 2s 9d to 3s; Duns 3s to 3s 6d. according to quality. Grass Seeds—Perennial ryegrass 3s 9d to 4s 3d, Italian 2s 9d to 3s, cocksfoot 7d to BJd, red clover 6d to 7d, white clover lOd to Is. Chaff—£4 5s a ton. Partridge Peas—ss Gd for No. 1 grade, undergrade 3s 6d to 4s 6d. '"• Barley—Malting 4s 7>.d, feed 3s 3d. Potatoes—Export quality £3 (sacks in) for Dakotas. '

DUNEDIN

(PSES*' ASSOCIATION TBLEORAM.) , DUNEDIN, September 16. The sowing of wheat in the Otago district .is being proceeded with •steadily. The weather is favourable, and orders for seed wheat are still coming.' 1 , in freely. Stocks of fowl wheat are on' the light side locally, and the wholesale price remains unchanged at 6s "6d a bushel, sacks extra. Merchants continue to draw supplies from South Canterbury, but stocks there are now becoming depleted. Business, in oats is limited, with the demand chiefly confined to seed oats and lines required for feeding of stock. A: fairly large quantity of seed oats has been railed to the country. The shipping market shows no change, A Gartons being quoted at 3s 4d f.0.b., s.i., arid B's at 3s f.0.b., s.i. The North Island is securing its requirements from other ports, as local supplies are hot sufficient to meet an' : outside demand.

.-.-' There is no deterioration in the chaff market. Sales are limited, and are confined to small lots ex store at £6 ,10s a ton. for good quality, sacks extra. Stocks in stores are not heavy, and Canterbury is being drawn on to supplement local supplies. : The potato market has not responded to the firming in the shipping market following purchases by the Government. Shipping values rule at £3 2s 6d f.0.b., Sri., for whites, and £3 5s for reds. Local value of best quality whites is £3 5s to £3 10s a ton, sacks included, ex store, with a dull market.

I A fair amount of activity is still being displayed in the seed markets. In addition to an increase in retail orders-being supplied to the country, sales of ryegrass, white clover, and crested dogstail have been made for export. Odd lines of cocksfoot are also being exported. Certified ryegrass is in short supply, and ordinary ryegrass is not over-plentiful. The cocksfoot market remains steady at recent prices, and the white clover market shows a tendency to firm, as a considerable quantity is being shipped to .England. Sales of dogstail are also being made to England. Stocks of Chewings fescue are now about exhausted, and wholesale values are very high.'', There .'has been more activity during the week in brown top, and the market is firm at recent quota- ■ •'■■:

BRITISH WHEAT MARKET

LONDON, September 15. ■Wheat cargoes, are firm, and parcels steady: Futures are quoted as fol-

CHICAGO FUTURES NEW" YOKK, September 15.

COMPANIES REGISTERED

WN.Z. Oil Exploration, Ltd.—Registered as a private company September 6. Office: A.M.F. Building, Wellington. . .Capital: £IO,OOO into 10.000 shares of £1 each. Subscribers: Wellington—C. R. Buhrer 9999. A. G. Johnston 1. Objects: To purchase or otherwise acquire oil-bearing lands or concessions, options to prospect and bore upon oil-bearing lands in New Zealand, and incidental. Interlock Tiles (N.Z.), 1 Ltd.—Registered as a private company September 7. Capital: £3500 into 3500 shares of £1 each. Subscribers: Interlock Tiles, Ltd.,. 3000. Wellington—R. G. Mexted 100, J. Blake 25, L. V. Kaye 200, W. Butler 50, R. E. Brown 125. Objects: To apply for purchase or "otherwise acquire any patents, brevets d'invention, licences, patent rights, concessions,-and incidental.

Thompsons Drapery, Ltd.—Registered. as a private company September 5. Office: Beach road, Akaroa. Capital: £2OO into £1 shares. Subscribers:. W. J. Thomp-. son 190, I. A. Thompson 10.,•.. Objects: Wholesale and retail drapers, outfitters, mercers, and warehousemen "in all its branches* ~- ■: ~■•••

IXXNDON WOOL SALES- '

PROSPECTS FOR PRICES

FALL FORECAST FOR MERINO AND FINE CROSSBRED

The Union Bank of Australia, Ltd., has received the following advice from its produce department, London:—-"At the wool sales about to open here, it is anticipated that prices, compared with last sales, will be approxima;ely: Merinos 5 per cent, cheaper, crossbred wool, fine, 5 per cent, cheaper; medium ahd coarse, unchanged."

QUIET BUT FIRM

BUSINESS AT BRADFORD

LONDON, September 15

The Bradford market is quiet b"ut firm. Business is restricted pending the outcome of the political situation. Quotations are:— Merinos — d. 70's .. 26£ 64's .. .. .. 25 60's ~ .. .. 24 Crossbreds—58's ... ' .. ..21 56's .. .. ..19 50's .. ~ .. 17 4f>'s (nominal) ... .. 16£ 44's (nominal) .. .. 164

SMITHFIELD MARKET

LAMB PRICES UNCHANGED EASIER DEMAND FOR - CHILLED BEEF (PKESS ASSOCIATION TILBORAM.) WELLINGTON, September 16. Prices' for lamb at Smithfleld are unchanged, but trade is affected by large supplies and low prices of homekilled. Wethers and ewes are quiet, with prices unchanged. Chilled beef is easier owing to the warm weather affecting demand. New Zealand porker pigs are firmer on the usual seasonal increase in demand. New Zealand baconer pigs are quiet and unchanged. The New Zealand Meat Producers' Board advises that the following are the ruling prices of wholesale quantities of the descriptions of frozen meat mentioned, and are for representative parcels of the goods sold on Thursday, September 15. Chilled beef prices are averages of the week, on which this list is issued. All prices are on the basis of delivered to Smithfleld Market (previous prices are also shown): Sept. Sept. Sept. 15. 8 1. Per lb.

VEGETABLES AND FRUIT

GHRISTCHURCH MARKETS

Good supplies of all vareties of vegetables are-coming forward, and values remain firm. Ruling prices are as follows: —Cauliflowers, up to 8s a dozen; cabbages,, to 18s 3d a. dozen; spring cabbages, up- to lis a dozen; rhubarb, 5s to :8s 4d a dozen; lettuce, 3s to 6s a dozen; spinach, up to 4s a dozen;- sprouts, small, to 6d pn lb; onions, supplies of Australian are available, realising to 12s a cental bag; potatoes, market oversupplied; values unchanged. ./. ■ .Fruits. Apples: Good supplies coming forward, and values are: Delicious, best quality, to 8s 6d a case; Jonathans, to 9s; Sturmers, a few extra : choice to 6s, others 2s Gd to 5s a case; cooking apples, 5s to 7s a case. * Pears: Choice dessert, up to 5s 6d a half-case. New Zealand lemons: Market oversupplied; values much'lower compared with last week.- '■':

Imported fruits: Supplies of Ausf

tralian navels are available, also Californian grapes. A small consignment of American grapefruit came to. hand during the week, and realised 32s 6d a case. Shipments arriving: Supplies of Queensland pineapples are expected early next week. Eggs: First grade Is ljd, second Is Oh duck eggs to Is Id a dozen.

DUNEDIN DUNEDIN, September 16.

Oranges are in short supply in the wholesale marts, only large-size navels now being available. A further shipment of navels is in the Waitaki. due from Melbourne on September 27. It is understood that this shipment of navels will be the last of the season and that the following shipment will be composed of valencias. A shipment of Califoraian grapes arrived during the week, The condition of the fruit, taking it all round, was excellent. Another is: expected at the end of the month. A small shipment of pineapples arrived by the Waikouaiti from Sydney. The Waitaki, from Melbourne, will land further supplies. New Zealandgrown lemons have a better demand. Supplies of poorman oranges are practically finished for the season. Supplies of apples are decreasing weekly. Consignments reaching the marts are quickly taken up. There is a good demand for extra fancy lines. o£ dessert apples, but poor-quality fruit is still offering at low rates.

lows:—" t. .. ... . Sept. 12. Sept. 15. iimdoji (a quarter)— - s. d. s. d. October :■.-. ■ . . 22 10 23 8 November \ ■■" . . 22 11 23 10i Liverpool (a cental)- — : October- .. •. 4 10| 5 ij r December . 4 9 4 113 March ". 4 .82 4 103

• -■.'.•' ■ . ■ Cents "av bushel ■ • 15 September > . \:U~---61$'y?-;&Ml December • •••,■ .. ~'\62|'- '■■v"'i|64fMay.- .•:„::.. ., ;".>;.■ .'64i;.^.*^8 :i '

New Zealand Sheep— Crossbred wethers and/ or maiden ewes: 481b and under 58 58 5* 49-561b 43 43 43 57-641b 48 48 48 65-721b 4J 4i 44 . Ewes: 481b and under 33 38 3S 3C 49-561b .. 34 34 57-6*lb 3 3 3 65-721b : 23 2J. 2 & N.Z. Lambs— ' Canterbury: 361b and. under 8 8 11 37-421b 8 , 8 ■ M * 7J « .74 : ™ Second quality: Aver, about 311b 7 i 74 it Other South Island: 361b and under 8 8 8, 37-421b 8 8 8 43-501b 74 74 78 North Island Downs: 361b and under 84 84 8 37-421b 84. 84 8 43-501b 74 74 74 Aver, about 301b 7| - 78 78 North Island: First quality: 361b and under 7| n '73 37-421b 11 11 . 11 Second quality: Aver, about 311b 74 74 74 Argentine LambsFirst quality: 361b and under 63 65 7 37-421b ■• • 64 64 64 N.Z. Porker. Pigs-^-First quality: 61-801b 7 63 6£ 81-1001b 63 68 68 101-1201b 61 64 64 N.Z- Baconer Pigs— 121-1601b 63 68 63 Boneless Bobby Veal— (Old season's), ex store in parcels .. 4 4 4 (Chilled beef prices are approximate average prices realised for the week.) N.Z. Chilled Beef—. Ox hinds, 145-210Ib 51 53 53 ' Ox fores, 145-2101b 3i 34 '38 Australian Chilled' BeefOx hinds, • 145-2101b 5i 54 54 Ox crops, weights corresponding 3| 38 31 Union of South Africa Chilled BeefOx hinds. 145-2101b 53 " 5£ 53 « Ox fores, 145-2101b H 3.i 34 South Rhodesian , Chilled 3eef— Ox Thinds, i 145-2101b 54 58 54 Ox fores, 145-2101b 3 33 3i Argentine Chilled Beef- _ Ox hinds, 145-2101b 6 .6i 6g Ox fores, , I45-2i01b 3| 4 4 Uruguayan Chilled Bee! - Ox hind's; 1 ■ ■■•■■- •■••• 145-2101b .51 64 64 Ox fores, 145^2101b 3i 3| 35. Brazilian Chilled Beef— Ox hinds, 145-2101b 58 52 6 ;