INEQUITABLE TAXES

Dominion, Volume 10, Issue 3161, 13 August 1917, Page 4

INEQUITABLE TAXES

The danger of sorious injustice boing done to persons of small means under the Government's taxing proposals for the current year has been recognised by the local Chamber of Commorco and business people generally. Tho suggestions recently laid before the Finance Minister on tho subject are both timely and reasonable, and though they do not fully protect tho interests of people with moderate incomes derived in whole or in part from investments in limited liability companies, the.v at least have tho merit of providing for sorao measure of justico boing done. AVo discussed the matter somo days ago and need not recapitulate tho facts of tho position as then set out by us. Tho outstanding fact is that if companies aro taxed as in tho past on practically tho samo basis as individuals then cach individual shareholder, no matter how small his incomo may be, will be taxed on that portion of it which ho receives by way of dividends on his investments at the same rate as a man with an income of £6400 or £10,000 or more a year. _ Tho injustice of taxing people with small incomes on tho highest scalo as though they had incomes running into thousands a year is too to require stressing. No one with any sense of patriotism objects in theso days to pay his or her fair share of tho high taxation which the \var_has rendered necessary, but that taxation should he framed on an equitable basis. The proposal of the local Chamber of Commerce is that company shareholders should bo called on to pay tho income tax on tho high scalo proposed under tho progressive income tax, but that they should be relieved of the special war tax. That is to say, they would havo to pay, regardless of the size of their incomes from their investment in limited liability company shares, up to 3s. in tho £ on those incomes. This, though it would mean an excessive rate of taxation in thousands of individual cases, would at'■ any rate'minimise the injustice that would be perpetrated were they called on to pay both taxes. A fairer method would be to tax cach individual shareholder in proportion to his income and to tax the company as a company on its undistributed profits. Thisi would mean that each individual shareholder would contribute to the revenue in proportion to his individual means and not be taxed as though cach and every ono of them had an income totalling tho full amount earned by the company in which they had invested their joint savings. The Finance Minister, •wo know, wants all the revenue he can secure, and it is necessary that.he. should maintain a' strong finance; but the money should be secured equitably. It must not bo forgotten that the taxes now being imposed, though they may bo reduced to some extent, will continue at a high rate long after the war. Thus many families, more particularly elderly people and widows, who have invested their sayings in limited liability companies, may find _ themsolves in a state of destitution through the curtailment of their incomes by this taxation, which takes no heed of tho circumstances of individuals but treats them only as a company. The Chamber of Commerce also brought under the Minister's noticc the position of companies with wasting assets, such as timber-cutting rights, etc. This obviously is another class of case calling for special treatment. With normal rates of taxation little exception was taken to the inequitablo nature of tho taxation of company .shareholders, but with the extremely high rates now proposed to be levied the whole position calls for revision and readjustment on a fair 'basis. No doubt the Government and Parliament will give the matter their attention now that it has been brought prominently under their notice, but suggestions from the various chambers of commerce, industrial -associations. and others may havo a helpful effect.