The Dominion. WEDNESDAY, JULY 30, 1919. AN INSTRUCTIVE RETURN
Facts which deserve thoughtful consideration are brought out in an official return of war taxation on incomes,, which appeared in our news columns yesterday. The return affords particularly plain evidence of the unsparing, call the Government has made during the war period and is still making on large incomes. Since 19M big profits have been made in some cases by individuals and firms, but of the total amount in question a very considerable proportion lias been gathered in by the State in the shape of direct taxation. At the same time the taxation of moderate, incomes has been, restricted to an extent which must be regarded as remarkable. The enormous increase an the revenue of the Dominion during the war years is all the more impressive as, an indication of financial stability when account is taken of the comparatively light burdens imposed on a great majority of the taxpayers. In this connection it is shown, for instance, in the analysis of income taxation for 1917-18 that of the total amount of £5,7-12,580 raised in.that year as ordinary and war income tax, £3,236,247, considerably more than half, was contributed by 290 taxpayers or companies. The sum taken from these taxpayers represented well over a third of their total income. At the other end of the scale a group of more than 26,000 taxpayers, w r ith incomes not exceeding £650, contributed only £179,474. Grouping items, it will to seen that of the total taxation on incomes for the year all but about one-sixteenth was paid by taxpayers with incomes of more than £900. Taxpayers in this category, numbering 7027, paid, in round figures, £5,400,000, while 30,922 taxpayers with incomes ranging from something over £300 to £900 paid only £327,430. With its more gratifying features, the return is instructive also as showing how far, in some respects, the Dominion has departed from sound methods and 'principles of taxation. The most obvious departure of this kind appears in the case of company taxation. Of the amount .raised in income tax in 1917-18 a good deal more than half : was paid by companies. . To a total | of £5,742,580 they contributed £3,107,249. People who invest money in company shares may be either wealthy or comparatively poor, but no allowance is made for this fact under the taxation methods in vogue. The income of a company is taxed as if it' had been earned by an individual. Thus it follows tliat where people of small means hold shares in a company with a big capital and turnover their income from this source may be taxed on the highest scale, although if'they were taxed only as individuals they would pay on something like the lowest scale, and in many cases would be immune from any income taxation. Manifestly there is no equity to individual taxpayers in such an arrangement. At the same t.inie the taxation of companies on the existing basis is in the most definite sense a tax on efficiency and a penalty on enterprise. • It is one of its worst features that it takes no account of the rate of profit, but is determined solely upon the aggregate amount of profit earned • by a company. No account is taken of the volume of capital invested or,of the volume of business done. A company heavily capitalised and making profits large in their total but moderate or ' even small in, relation to its capital, is taxed on the maximum scale. A company which makes a much higher percentage of profit on a smaller capital escapes with lighter taxation. As far as taxation can affect the matter the heaviest discouragements are thiis imposed upon any attempt by a company to efficiently develop and expand its operations, and this in spite of the fact that a more or less important proportion of its capital may bo held by small shareholders. But, what is worse, company taxation as it is now framed raises a direct obstacle to this form of enterprise. The multiplication and extension of joint-stock companies, with a big proportion of their capital, or the whole of it, subscribed by a numerous body of small shareholders, is one of the most hopeful lines of advance open to this country, and one that should, by reason of the scale of operations rendered possible and higher efficiency make definitely for a reduction in the cost of living. Free progress on these lines would tend increasingly to substitute co-opera-tive trading for trading for individual profit, but there can be no such progress while the inequitable system of company taxation now in vogue is maintained. This inequity has been commented on and exposed often enough in recent times, but the taxation of companies in the past has formed an easy and direct means of raising revenue along'the lines of least icsistance, and successive Finance Ministers have naturally shown reluctance to abandon it. In ordinary times the scale of taxation did not warrant any widespread effort towards a more equitable system, and in war times, faced with the necessity for emergency measures to meet the demands of the times, the matter of reform was not pressed in spite of the toll exacted. Now, with the war over and a high rate of taxation in prospect for some time to collie, the question becomes one of urgent public policy. The Finance Minister last year promised to give the matter consideration, and various suggestions were put before him by the Associated Chambers of Commerce. No doubt on Sir Joseph Ward's.re-
turn the subject will be revived in the hope that something may be done during the coming session to place things on a more equitable footing.
Permanent link to this item
Hononga pūmau ki tēnei tūemi
https://paperspast.natlib.govt.nz/newspapers/DOM19190730.2.19
Bibliographic details
Ngā taipitopito pukapuka
Dominion, Volume 12, Issue 260, 30 July 1919, Page 6
Word count
Tapeke kupu
950The Dominion. WEDNESDAY, JULY 30, 1919. AN INSTRUCTIVE RETURN Dominion, Volume 12, Issue 260, 30 July 1919, Page 6
Using this item
Te whakamahi i tēnei tūemi
Stuff Ltd is the copyright owner for the Dominion. You can reproduce in-copyright material from this newspaper for non-commercial use under a Creative Commons Attribution-NonCommercial-ShareAlike 4.0 International licence (CC BY-NC-SA 4.0). This newspaper is not available for commercial use without the consent of Stuff Ltd. For advice on reproduction of out-of-copyright material from this newspaper, please refer to the Copyright guide.