Want Allowance Increased

Press, Volume CV, Issue 31005, 10 March 1966, Page 3

Want Allowance Increased

(New Zealand Press Association) WELLINGTON, March 9.

The Manufacturers’ Federation has urged the Minister of Finance (Mr Lake) to increase the rate of investment allowance.

The federation said the allowance should be raised to 30 per cent to generate within Industry the capital needed for replacement, expansion and modernisation to place New Zealand manufacturers on a footing comparable with those in other countries. A major difficulty faced by industry was that residual money left in a business after providing for taxation did not enable it to build up sufficient reserves to finance plant modernisation and future development. “Normal depreciation will never do this satisfactorily since it is based on the original cost of an asset and takes

no account of capital erosion or currency depreciation,” the federation said. An investment allowance was an essential part of a constructive and forward-looking tax policy. The Tariff and Development Board had said in 1963 that the prices of New Zealandmanufactured goods should be reasonably comparable with the prices of similar articles in the country of origin, after allowance for difference in currency valuations and the size of the domestic markets.

“How can prices for New Zealand goods be comparable unless we are producing on equal terms?” the federation said.