WAR TAXATION

Dominion, Volume 11, Issue 149, 13 March 1918, Page 6

WAR TAXATION

CONTRIBUTIONS TO WAR LOANS STATEMENTS BY FINANCE MINISTER Interesting correspondence lias passed between Sir Joseph Ward, Minister of Finance, and tne Association of New Zealand Chambers of Commerce, dealing with the questions of taxation and contributions to war loans. - Under date February 2G, Mr. H. D. Vickery, secretary of the Association o!' the New Zealand Chambers of Commerce, forwarded to the. Minister copies of resolutions which were adopted ab the conference of Chambers of Commovie held towards the end of list year, on the subject of land and income taxation in New Zealand. Tile communication proceeded:—"ln August last you were good enough to receive a deputation from this association, which pointed out various objections to the present method of taxing the incomes of companies. The feeling is almost universal among the business community that; the present system of taxing the incomes of companies is operating harshly in many cases and that steps should he taken to set up some authoritative board of inquiry fo investigate the present system of taxation and, if possible, to recommend a more equitable one. If it is thought inadvisable to entirely leinodel the present system during the war period, it is felt thai at least something should be done vo remove some of the existing anomalies. The resolutions which were adopted (copies of which are attached) advocate—(l) The setting up of either a small committee of inquiry or a Royal Commission ; (2) amendment in the present method of .taxing incomes of joints stock compair'es; (3) amendment of the presei..t ttacutory provision regarding compulsory contributions to war loans; arid (4) the desirability of profiteainiiig Departments of the State and all loca'i bodies being made liable for income tax and land tax in respect of their commercial activities. In bringing the resolutions to your notico I was directed respectfully to express tho hope that you will consent to tho appointment of a board of mvest:gation. 1 need hardly say that the amount of taxation which is required at. this time is not in question. The matter at issue is the inequalities even among the same class of taxpayers which arise from existing systems."

Sir Joseph Ward replied, under date March '2: —"I haw to acknowledge receipt of your letter of February 26, conveying the resolutions passed at a recent meeting of your association on the matter of taxation and contributions to war loans. In reply, I have to advise ycu that I am perfectly willing to consider any representations in these matters that may come from your association, and an. of opinion that the proceedings recommended in the seco/ia puiagraph of the resolution, No. ifi (c), will be the most convenient one to adopt. I cannot, however, consent to any committee of the association having access to the records of iiio .Land and Income Tax Department, as this would be contrary to the provisions of the Land and Income Tax. Act dealing with secrecy on matters relating to income tax. I liaVe no doubt that any committee of your association could obtain all information necessary with reference to taxation of companies in other countries without reference .to the Land and Income Tax Department. "With regard to the resolution dealing with compulsory contributions to war loans, I have to inform you that the provisions of the Finance Act, 1917, permit the board thai has been appointed by that Act to dealwith the pointu mfcntiqrcl in your resolution as to tiha taxpayer's ability to contribute, and are such as will prevent any inequity in the administration of tile provisions of the Act. In the pamphlet, accompanying your_ letter I notice a reference to the English system of corapi\nv v taxation, and will be glad to know the authority _for thestatement that there is provision in England for the remission of an amount representing the difference in the rate of tax at which the company has paid and at which the shareholder should pay on his own income. lam advised that in TCngla.nd uo personam receipt of an income in excess of £700 is entitled to any remission or rebate, and that the procedure there is that, the companies pay tax on the income •shown in their returns, with the power of deduction from the dividends, and that in addition the individual shareholders in receipt of income over £3000 are required to include in their returns the amount of dividends received and pay super-tax thereon in addition to the tax paid by the. comnany. The statement in the pamphlet would, therefore, appear to he somewhat misleading."