THE WAR PROFITS PROBLEM

Dominion, Volume 9, Issue 2822, 13 July 1916, Page 4

THE WAR PROFITS PROBLEM

It seems to be generally admitted now that, however admirable in principle the taxation of war profits may be, the schemo provided in tho Finance Bill for giving effect to the principle in 'New Zealand needs careful revision and amendment 1 if glaring injustice is to bo avoided. The Bill of coursc docs not propose to tax war profits, but" "excess" profits, and as we have pointed out on previous occasions the method proposed to be followed to ascertain what constitute "excess" profits is one which will work most inequitably and will inflict unwarranted !"hardships, and in some cases ruin, on new businesses, while allowing old-established businesses earning a /bigger percentage of profit to escape. Wo revert to the matter now bccause of the action of the New "Zealand Society of Accountants in bringing under the notice of the Minister, of. Finance certain anomalies and inequalities in the proposals embodied in the Bill, and more especially because of the very clear and convincing manner in which they show the inequitable nature of the provisions relating to tho taxation of business firms on the "excess" profits basis specified under "tho Bill. ' The Finance Minister would no doubt appreciate the force of tho case made out by this dissatisfied body of experts in accountancy and business finance, and we trust that tho volume of evidence now available for the guidance of tho Government will lead at least 'to tho appointment of a competent tribunal with sufficient powers to order an equitable assessment to bo made in all. cases where the taxpayer may have reasonable grounds for appeal. It is not suggested that any avenues of escape from' legitimate taxation of "excess" profits should bo made, but that proper safeguards should be provided—in what is admittedly an ornergency measure hurriedly _ devised—to ensure that the taxation shall be apportioned on something approaching an equitable basis. The suggestion of the Socicty of Accountants for assessing the profits of- suppliers to | co-operative butter and cneesc factories and creameries is one which tho Minister will do well to pass over. It is both unsound and unjust. It-assumes that if the farmer say, a shilling for what i"ho previously sold for elevenpence, he necessarily makes a penny excessprofit, whereas the extra price received may be eaten up by increased cost of production. It is one of the weaknesses of the city dweller that ■lie seems to imagine that the increased cost of living does not affect the man.on the land, and equally there are people who do not appreciate how greatly the farmer has "been affectcd by the increased cost of commodities used about tho farm, tho difficulties and the increasedcost of. securing farm labour, and the increase generally in the cost of production, due to causes ovor which lie has no control. It is quite bad enough to tax the small dairy farmer.on his "excess" profits, "if he has any; it would be monstrously unjust to tax him on his receipts.

[Since the above was iu type the Finanoe Minister has uiiacle aspeech in the House of Representatives in which he meets most of the dbjections raised to the method of assessing excess profits. It is plain from his speech that while the necessity- for raising the revenue provided for under thc-.Bill must be insisted on, ho is prepared to amend the machinery of the measure in a reasonable spirit so as to ensure a more equitable distribution of the burden of taxation. Sin Joseph .'Ward is to bo congratulated on the tho amendments he proposes to introduce.]