COMPANIES AND TEE FINANCE BILL

Dominion, Volume 10, Issue 3177, 30 August 1917, Page 4

COMPANIES AND TEE FINANCE BILL

Examination of the details of tho | Finance Bill as affecting limited liability companies makes it clear that there is a, possibility of grave injustice being done to tho shareholders of such companies and serious hampering of industrial enterprise. A pretence is made of granting relief to small. shareholders by providing for the repayment to those whose total income docs not exceed £300 of that portion of tho taxation paid by companies in respect of the- dividends of such shareholders. That is to say, every shareholder in a, company whoso income does not exceed £300 will have refunded to kirn the taxation paid by tho company on tho amount be receives by way of dividend. This very limited exemption leaves hundreds of shareholders of moderato means to bear taxation on tho highest possible scale so far as the income they derive from sliarcs in limited liability companies is concerned. A man with an income of £400 or £500 a year will be taxed on the same scale as a man with an income of £4000 or £5000, or even £6400 a year. The proposal is most, inequitablo, and tho clause in vhe Bill which makes a pretence of giving relief to small shareholders is too limited in its effects to remove tho Benso of injustice which must be occasioned. Tho Finance Minister wants revenue and he must have it, but ho should secure it in such a manner as to ensure that the burden shall bo distributed fairly and justly The individual taxpayer should be called on to pay according, to his means, and should not be penalised so excessively simply because He has invested his savings, in conduction with others, in some industrial or commercial enterprise in the form of a limited liability company. The Finance Minister knows as well as anybody that but for such methods of providing tho working capital for the development of our industries New Zealand would be a much less nourishing condition than it is to-day, and much more backward in a multitude of directions affecting the prosperity of tho necplc generally. Apart from the injustice to those of moderate means who havo invested their in companies of various kinds, at is an unsound policy economically for tbe State to adopt such an attitude towards such undertakings us will discourage and hamper this form (-f enterprise. Tax the individual shareholder by all means, but tax him on tho basis of his actual income. There is another feature of the Finance Bill concerning which wo trust Sir Joseph Waud will be ablo to give a satisfactory assurance. That is as to the inclusion of limited liability companies without reservation under the clause of tho Bill which provides for compulsory investment iti tho. War Loan in proportion to incomo tax iiaid last financial year._ If companies engaged in commercial, trading, am)

industrial enterprises arc to lie compelled to invest in the War Loan regardless of any other consideration than their income for IDIG (lor thai) is what tho proposal amounts to), then the Finance Ministep, iinterfering in what may provo to do a dangerous manner with tin financial stability and development of tho industrial and commercial life of tho Dominion. In many instances tho forced investment by companies in the War Loan on the basis stated will cripplo and hamper business and react in directions perhaps not anticipated at the present time.