The Dominion THURSDAY, MARCH 14, 1918. INEQUITABLE TAXATION

Dominion, Volume 11, Issue 150, 14 March 1918, Page 6

The Dominion THURSDAY, MARCH 14, 1918. INEQUITABLE TAXATION

The correspondence which has passed between' the- Finance Ministee and the Council of the Associated Chambers of Commprce on the question of the taxation of companies and the enforcement of compulsory contributions to War Loans does not encourage the hope of any immediate action on the part of-the Government in the- direction of removing what is recognised by all to be a very real and substantial injustice. So far as compulsory contributions to the Dominion's War Loans arc -concerned, littlo .exception can be taken to the attitude of the Government. It is right that all who are in a position to do so should contribute to theso loans, and thoso_ who do not do so of their own volition should be compelled to assist the State iii proportion to their means. Subject to certain ■ safeguards, the broad principle here laid down will be universally approved. Sir Joseph Ward argues that the necessary safeguards are provided by the appointment of a board to which any person or institution called on to subscribe to theWar Loans may appeal for relief from the compulsory provisions of the Act. Assuming that this board performs its duties in an impartial spirit—and by this we mean uninfluenced by a Departmental bias which it is sometimes difficult to escape—then, little exception can be taken to the law as it stands. With regard to the taxation of the incomes of joint stock companies, however, the position is very different. The method of taxation of these companies is so obviously unjust and inequitable that it is not possible to defend it. The Finance Minister himself does not attempt to do so —we do not believe he has ever attempted this hopeless task. Ho simply says in effect that he_ must havo the revenue, he is willing to listen to any suggestions which may be made for. a more equitablo distribution of the burden—but he ■ must have the revenue from income j tax in one way or another. This! is all very well so far as it goes. I Neither the Chambers of Commerce nor anyone else, so far as we are aware, object to the collection of all tho incomo tax revenue- that may be required to meet tho needs occasioned by the strain of the war. There are some, it is true, who point to the huge surpluses eacli year, and argue therefrom that more is being taken from the taxpayers than is required. But putting that view aside, the point is i that whilo there may bo ■justification for the collection of tho hugo sums by way of income tax, there is no justification for collecting them inequitably. The attitude of the Finance Minister rather seems to suggest that he throws on the Chambers of Commerce the responsibility for devising a scheme of taxation which will relieve the companies of tho existing injustice and at the same time secure for the Stato the revenues it requires.. This obviously is an unsound position to take. If the existing method of taxing companies on their income regardless of the proportion of income to capital invested is unjust, andnp one appears ready to deny that it is unjust, then it is plainly the duty of those who imposed this unjust method of taxation to remedy it. It is manifestly absurd for tho Finance Minister or anyono else to call on the Chambers of Commerce or any person outside the Taxing Department to remodel the system, for even if they wore willing they have not the information, on which to base the calculations necessary for such readjustment. Sin Joseph Ward says lie" cannot allow any Committee of the Associated Chambers of Commerce to havo access to tho records of tho Taxing Department because itis contrary to the laws, and by this admission clearly shows that his own Department is the only possible authority in a position to make the necessary readjustment. Tho truth of tho matter is, no doubt, that tho Government believes, and not without justification, that it is casior to collect largo amounts of taxation from joint stock companies than it would be to collect them from individuals. Yet the companies aro merely collections of inclividuals who have joined together for the purpose of developing industrial and business enterprises, in most cases to the advantage of tho country. The individual interests of shareholders In companies are just as much entitled to fair and just_ consideration as the interests of individuals in other directions. The srrcater part of the Liver industrial enterprises in New Zealand have been built up almost entirely through the formation _ of joint stock companies—the capital which was required for these under-.

takings, ami which alone enabled thorn to be successfully developed, could not have been obtained by any other means. The benefit which New Zealand has derived from these enterprises is incalculable. What possible justification, then, can there, bo for perpetuating an injustice which has become- so seriously aggravated by the high scale of taxation necessitated by the war? Of course there is no justification; but so far as can bo gathered from the Finance Ministeii's reply to the Chambers of Commerce, the Government is quite prepared to allow this injustice to continue indefinitely. A -Government which knowingly does injustice, and which, either through lack of courage or lack of capacity, persists in the wrong it is perpetrating, inflicts a double injury. It not only unjustly and callously injures those immediately concerned, but it strikes a blow at the morality of the whole nation.