FLAWS IN THE NEW TAX.

Hawke's Bay Herald-Tribune, Issue 82, 23 April 1937, Page 4

FLAWS IN THE NEW TAX.

Tke difficulties that lie in the way of framing new taxation schemes that will work with complete equity is well illustrated in what we are told in one of to-day 's eabled coinm'ents on Mr. Neville Chamberlain 's new excess profits tax. As was explained yesterday ,this is to be levied on a roughly graduated basis, upon business profits earned in excess of the average of those for the three years 1933-35. On the faee of things, it looks fair enough that the greater the excess .the higher should be the proportion taken by the Government by way of taxation. As is so often the case, what looks to be fair in its broad aspect comes be unfair in individual application. It is now pointed out, with particular instances given, that this new tax is likely to fall most heavily upon those industrial and business undertakings which suffered most from the effeets of the depression and were slowest in unaking recovery. When attention ia drawn to it, it is easy to see that those whose profits were either very low or, as with some, disappeared altogether during the 1933-35 period will, now that they too are experieneing better times, be placed on a worse footing.as concerns taxable excess than those who prospered during that period. This may be said, notwithstanding that provision is made for the deduction of losses . actuaUy sustained. Taking the case of a company which made no profits during 1933-35, it will now ,according to our reading of a garbled cable, be taxed on the whole of its future' profits in excess of 6 per cent., while another company whose profits for those years averaged 10 per cent. would have its tax assessed only on future net earuings in excess of that rate. It is now suggested that, to some extent, this injustiee might be remedied by including the more prosperous year 1936 instead of 1933 in the average. Possibly the fairer thing would be, in ascertaining the taxable excess, to attribute to all some low minimum rate of profits during the average years.