INCOME TAX.

Dominion, Volume 5, Issue 1547, 17 September 1912, Page 6

INCOME TAX.

'~' POSITION OF INDENT AGENTS, :: BlLL.chamber. of commerce disots- •.-., :';.,.. . ' 'sion. :A very interesting discussion .on ..a phase ot the taxation .proposals in tho Land and 'Income Tax Amendment Bill . now. betore.Parliament took place at a special; meeting of. tho AVellington Chamber of Commerce, which was held -last night.. There were about thirty members at the meeting. Mr. A, E. Mabin, the president of- the chamber,' was in' tho chair! The Commissioner of Taxes, Mr. G.'F.'.C. Campbell, was'among those.who addressed the gathering. ; "Personally Liable." :Mt.' Mabin said that' a 'mueh-discussed clause of the Bill'was No. 0, in which provision was 'made as'to, the assessment of incomo derived'from sales;by agents. Jt was the clause'col 100. uially Known'as the indent agents' clause; It made the indent', agent personally responsible '.for the income-tax levied.by tjhe Government upon .tho profits made by his principal. The Government'had met some of the objections urged to-the proposal by-grant-ing the agent six months' grace in order that .he.inigbt"endeavour to recover the tax.frnm, oversea. ~' Otherwise'the Government appeared to be prepared' to' push 'the' clause through without much concession. The hew proposal in, the' 1 Bill :,as passed by the Public Accounts X'ommittee, exempted -from--the provisions of tlie graduated tax shareholders of'companies whose principal objects ;we're';bf a manufacturing or m'ofcantiie ,naturfi,,".and'.wiiich '.possSsscd lands solely.'iri connection with; th'p.'manufacturing: or- mercantile.purposes of its business.-. -Shareholders in,;cumnanie3 whose principal',object was. the: •lending of money we're also exempt -unless ; tho, company'also owned .or- ; held iand. : other .'than -its business 'premises.; ■'These' clause's-would apailqw -shareholders' in .freezing companies,, : '.manufacturing';;', industrial, and-, mercantile '.companies,' dairy'.and flax companies,' .'and;/the'iike,..to .escape the graduated,- tax, ;and -.rightly. ..so.'■', -Share-, holders in "land; speculating companies, farming-.'.companies, and the like, 'however, would- cbntinuo to..be'.'li'able, : and;if the .'chamber assented, to the principle

that'the' graduated tax was a.prpper'one, * anil-', wis I for....the' purpose '.of \ forcing on closer,settlement, then'' they, .apparently, niiist-:agi;ee .to shareholders .in'-land and similar..'companies being inditi'dually liable-for'the. graduated, tax.as if they . were individually owners of, their'.proportions of the land.assets.. An : injustice which- had "affected flax lands'.for several rears'past'was.now about to jbe Tenio'ved. The .flax .•indi'stry'had been got at on all side's by:. the- Department fori niany years. and the iricoipo -tax"Tiad all:been biting at the iri: ■ du'stry. -'.•;■'■ '.' : '•"'■. •'• : :,.- .'-.'.'A'Mere Conduit Pipe."

Mr.;T. C. Dawson, chairman of .the Indent Agents' Association,' said that if this' : Bill:passed, great hardship would-be inflicted oh indent agents;',- Many of the Engjish' firms would/not hear of paying theitax.. The.indent agents should .take the'-matter.' up : with their-■-Home mer-; chants,.and .let.,the merchants work it froia that end. If- -the merchants could get the-.British Government to tell- the

New" Zealand' Government that,. Britain intended to. tax New Zealand wool, the New, Zealand Government might think twice about taxing these British manufactures'. ■''':

Mr." J. P.-Luke said that the .chief interest of the country Was to get the. population here to manufacture tho articles needed. If the indent agents had had a good time in "the past, there, was no reason why they should hot in the future pay the tax proposed. ... •:Mr. M. Myers, held,that income tax should be paid in the country where the profits were made. The indent agent was a mere conduit pipe for the passage of goods. He was really an agent of the ' person whos,e''-" orders '''he' was sending , Home."lf the order was executed, the" agent gat the commission. Tho contract, then, was in England, not in New Zealand. ■ Therefore, it had been held that the business was done in England. The indent agent also paid .taxation on his own profits. The Bill-required the triple payment of income .tax, and then members of Parliament asked how it was that the prices of these goods were so high. If the New Zealand Legislature passed this Bill, it would go further than the British Government had ever gone. What would the people of New Zealand say if the British Government did what the, New Zealand Government proposed to dq, respecting (say) our. wool, or our butter? Points against the proposal in the Bill were that it involved double taxation; , that-the business was not done in New Zealand; that it invited reprisals; and that it might take away the livelihood of a" number of indent agents now. carrying on business here. ' _ "Inequitable, partisan in its application, and-morally wrong" was Mr. Robert Hall's description of the Bill. He 6aid that the New Zealand Government sought to draw taxation firstly from the merchant in New Zealand, secondly from the agent in. New Zealand,' and thirdly from "the- manufacturer in England. It was morally wrong because it made an agent, pay taxation on. money oyer which he had no" cohtrbl. It' was ''inequitable because it exempted those who'could buy goods in London through their ■ own agent, and penalised those who dealt ...•'through an agent ill New Zealand.. Taxes Commissioner Speaks. Mr. G. F. C. Campbell (Commissioner of' Taxes), when invited to speak, said that the Minister for Finance had desired him to be present in order that the Minister might ascertain the opinion of the Wellington business men . directly concerned. The principle of an indent agents' taxation, Mr. Campbell continued, was not new as some appeared to assume. For some years such-a tax had been law in ISew Zealand, but in the'last two years it' had riot been enforced because of a . weakness in the Act. It was a -remedy for that weakness that the Bill- proposed. The Bill would put the resident taxpayer on the same footing as tho non-resident trader.. There was nothing inequitable in that. (Hear, hear.) During the whole of. the time in which taxes had been paid there had never been any hardship inflicted', and he did not think that with reasonable'administration there would bo any in the future. The English Act was far moro arbitrary, than the' New Zealand Government's proposals. The question was: Is the Government of New Zealand going to allow a legal technicality to permit a man to avoid taxation which it -was intended he should pay? The Government said that it was not. It'had been said that this would mean double, taxation in New .Zealand. It would not mean .double taxation "iri New Zealand,"- though it would mean double taxation.-: Mr. Myers had said that the effecting of the proposal might bring reprisals. The Lords, had already failed to see anything, inequitable in not exempting a person Worn the payment of taxation in the country where his money was made because he had already-paid taxation in the country where his goods wt:re produced. So much- income would be lost to England "if such n» exemption were made.that England could not for one'mo--ment entertain the idea. When .so many others were paying double taxation, why should the indent agent be specially excepted? As to the personal liability of the indent agent, if anyone could suggest an- •- other means of collecting the tax the Government would be prepared (o listen to it. If it had not been for the action of the indent agents, Ihe present clauso would not have been necessary. (Hear, hear.) All taxation which was going to be aay good at all had to be arbitrary. If the clause came into operation there would r>» no alteration in the system of taxation which had been in existence for many years. '(Applause.) Mr. Robert. Hall movoci: That Clauiß 2a and Clauso 6 In the Bill are inequitable, and ought not to be- passed into law. Mr. F.' W. Manton seconded. ■ The motion was lost on the voices. On the motion of Mr; Leigh Hunt, it was resolved that the Government should h» asked to introduce the system obtaining in England of averaging profits and losses for three years. • , In reply to a point raised by Mr. Mabin, ' Mr. Campbell said.that it was within the i discretion of the commissioner to determine whethor a. company entered into business other than that of a manufacturing or mercantile nature. If it d"-' the whole of its capital would be taxed.