BANKS AND TAXATION

Evening Post, Volume CX, Issue 72, 22 September 1930, Page 8

BANKS AND TAXATION

(To tho Editor.)

Sir,—Your correspondent, "The Public, is evidently "hiding his light under » bushel," and as he considers "Fair Play' speaks for the banks, probably he speaks for the Government. Prior to recent increase in taxation the banks were carrying a much greater proportion of land and income tax than any other class in the community. This was largely owing to the increased assessments during the war and, although relief was promised by the Reform Government, it was deferred from time to time and was not granted, so that the banks remained the heaviest taxed section of the community, and the Income Tax Department are well aware of this, fact. ' ~

Therefore in paying a further 10 per cent, tax tho banks are still doing more than their share to assist the country in its present difficulties. With regard to the increased note tax, any business, man will realise that the,banks must conduct this service at a loss, with an increase of 50 per cent, in the tax payable to the Government thereon." This means an issuing cost of approximately 6% per cent, for all bank notes in circulation, and naturally every effort .will be made by tho banks to reduce this serious loss. The Government may tax as they like, but they cannot compel any class of the community to trade at a loss. With regard to issuing gold instead of notes, nothing would suit tho banks better (and ■ the Government less), providing we could build an iron wall to keep the precious metal in the Dominion. As this cannot be done, the banks have to consider the national point of view and go on issuing notes at a loss. This is a simple statement of fact which can be proved in five minutes to any person who really wishes to hear the truth.

The banks have thousands of small shareholders relying upon their dividends for a living, and they receive approximately 7 per cent, upon such shareholders' fnnds. Therefore it is necessary for banks to conduct their business upon sound lines just as any other traders do, and if their taxes unduly increase th vey are unable to perform their services so cheaply. Surely this is evident to the meanest intelligence. As it is bank profits and dividends have been declining for the last year or two, being on a much' lower ratio than that earned by the banks in England, Banking service here is cheap, and, assuming a trader pays an extra 5b for keeping his account on 31st March, 1931, surely that will not seriously affect his financial position. If such extra charge provides.the banks with reasonable' cover for the increase of 50 per cent, in note tax (excluding excessive income tax and extra 10 per cent, thereon) then I am confident the banks will reduce the charge on accounts. . ■; ■ ■ My experience of the banks is that they render valuable service to the community at a comparatively low price,' and the Dominion is well served by the banks trading here.—l am, etc., ACCOUNTANT.