TAXATION ON BANKS

Dominion, Volume 9, Issue 2635, 4 December 1915, Page 14

TAXATION ON BANKS

.BANK OF NEW ZEALAND MTT PAY £120,000. After dealing with the readjustment of tho Dominion's taxation at yesterday's meeting of the Bank of New Zealand, the chairman of directors (Mr. Harold Beauchamp) had some remarks to make with reference to the effect on tho bank. "In this readjustment of taxation, necessitated by the financial situation resulting from the war," he said, "the banks have, I think, come in for more than their fair share of the additional impost. I may explain that banks are assessed for income tax, not upon their actual earnings, but upon a hypothetical income based upon a percentage of their aggregate _ assets and liabilities within the Dominion. This percentage was formerly 155., but under the recent Finance Act it has. been increased to 30s. per cent. Our hypothetical taxable income has therefore, at one- stroke, been doubled. But this is not all. The tax we have to pay has also beon doubled. It was formerly Is. 4d. in the £; it is now 2s. Bd. in tho £. The practical effect, therefore, of these arrangements is, you will see, that our incoino tax has been quadrupled, and that we shall now have to pay at the rate of ss. 4d. where provious'y we paid only Is. 4d: Hitherto our income tax has amounted to about £15,500 per annum. In future it will be about £62,000 per' annum. Added to land tax and note tax, our total contribution to the taxation of the country will reach probably about £120,000 per annum.

"We are not complaining. The hank is doing well, and therefore, meantime, cheerfully shoulders the burden laid upon it. But we feel it is an unduly oppressive burden compared with that laid upon others, and we therefore look forward to the time when some remission may be allowable. The anomalous position is that, while it purports to be an 'income tax,' is is payable altogether independently of our actual income. It is quite conceivable that a bank might sustain losses which would leave it practically without income for some particular j;ear, but that would not. relievo it of liability to pay income tax under this assessment. Viewed from that- standpoint, I think most people will , regard tlie basis of tho tax as inequitable. "However, as I have said, in existing circumstances, whilst we earn we will cheerfully pay; but, under other conditions, ws contend that Parliament should, for the purpose of taxation, assess our profits upon a more liberal and equitable basis."