INCOME TAX DEMANDS

Dominion, Volume 14, Issue 121, 15 February 1921, Page 9

INCOME TAX DEMANDS

PROPOSALS FOR RELIEF COMMISSIONER’S PLAN BILLS FOR HALF AMOUNT The following memorandum regarding the payment of income tax has "been issued by the secretary of the Association of New Zealand Chambers of Commerce to the affiliated chambers: — “In order primarily to assist importers who are possibly financially embarrassed owing to tho heavy stocks which aro generally being carried, the Commissioner of Taxes is prepared, subject to prior arrangement between the taxpayer and himself, to permit the payment of income tax, which is due this month, to be made id the following'manner: — . “1. Half the amount of the income tax payablef to bo paid on due date. "2. The balance can be paid by one bill at three months or by two bills at three and six months. "To the amount of tax represented by the bills is to be added 15 per cent, penalty, the bank charges, stamps, etc,, and there is to be, included in the bills an amount to cover the discount of the bills at 6| per cent, and exchange on bills payable elsewhere than at Wellington ; in other words, the bills are to be of such an amount as when discounted by the commissioner will represent the amount of taxation, and tho ,15 per cent, penalty. The commissioner aiteo requires that the bills shall be endorsed by the taxpayer’s bankers. On payment of the bills at due date tho penalty tax will be refunded.

"This method of payment will be permitted only in those cases where the taxpayer is unable to find the full amount of income., tax himself, or obtain it from his bankers, and only after arrangement has been made by the taxpayer with the commissioner. The association is given to understand that tho Government must discount tho bills, as it is necessary to bring the revenue into tho financial year ending March 31 next, in terms of the Public Revenues Act. “This method of paying the income tax will be permitted only in the circumstances mentioneel above, and in view of the special conditions obtaining at this time, and is not to be considered as a precedent. It is suggested that chambers of commerce should advise such of their members as are likely to be interested." Financial Stringency. A long resolution criticising this proposal has been published by the council of the Canterbury Chamber of Commerce. It recites the causes of an extraordinary financial position, including the delivery of practically two years’ imports in one year, with a consequent increase of taxation through the Customs Department; the disturbance of the woo, market, and the raising of a compulsory loan of £6,000,000.. As a result of these conditions, "a very great number of the taxpayers of New Zealand find it practically impossible to pay immediately in cash the income tax now demanded from them."

The council recalls the proposal by the conference of chambers on November 21, that tho Government should levy tho income tax in two instalments, on Janul ary 31 and July 31. which was submitted to the Prime Minister by deputation on November 26. It now learns “with astonishment and indignation" that the matter “has been left by the Government entirely in the hands of the Commissioner of Taxes,” and "protests against the commissioner’s scheme—(l) Because a responsible and solvent taxpayer should not be forced into the position of a suppliant to any Civil Servant or public officer, and (2) because the conditions laid down by the commissioner to be imposed on the taxpayer wishing to paar by instalments are usurious." Special Session Proposed, The resolution then proceeds: "This council therefore urges the Government even at tho eleventh hour, to rise to the occasion and to do tho right thing in extraordinary circumstances. It points out two obviously simple and alternative courses: z (l) To call a special session of Parliament at once to amend the law to permit the levy of the current wear s income tax in two instalments on February 7 and August 8, 1921. or (2) to accept payment on account of half tho income tax payable on tlio present due date (February 7, 1921). and refrain from proceeding to recover the other half until the matter can be laid before Parliament. Terms of the Bills. "If the Government, in spite of all the warnings and protests which have been made, resolves to take no action for the assistance of taxpayers other than by reference to the Commissioner of Taxes, then this council, with regard to the commissioner’s proposals, submits the following amendments as to partial payments of tax by bills:—(1) Taxpayers in all pans of New Zealand should be placed on equal terms, therefore no bank exchange should be charged to them; (2) if tho bill is endorsed by the taxpayer’s bankers and includes discount, so that the hill when discount. *d by the commissioner represents the balance of tax not paid by cash, then such bill should be treated as caSn for its discounted amount, subject of course to the right to sue for penalty in the altogether remote contingency of the bill being dishonoured. But the penalty of 15 per cent, additional proposed by the commissioner should not Ire added to the original bill. Further, the rate of discount: should not be 61 per cent., but the lower rate for bankers’ best bills having regard to the quantity and quality of tho business; and (3) if the bill is not endorsed by the taxpayer’s banker, it should be treated similarly to a bill so endorsed, except that the reasonable discount for the bill would be 'higher and that a second and separate security bill for payment of tho legal penalty might be asked for by the commissioner, to ire held by linn and not discounted and returned to tno taxpayer if the first and principal bill is met at duo date.” Depreciation of Securities. The council also passed a resolution in affirming the necessity for the appointment of a Royal Commission to inquire into the proper principles of all taxation in New Zealand; suggesting that the Land ’and Income Tax Act be amended next session to permit of flie loss., on sale of compulsorily-taken 1920 war bonds being treated as a trading expense deductible from income, and affirming the desirability of the Government taking si'eps to effect reasonable retrenchment in tho administration of the various departments and requesting member's of Parliament to make representai’ions in this direction.