INCOME TAX.

Hokitika Guardian, 30 July 1921, Page 1

INCOME TAX.

EXCESSIVE IMPOSITIONS

PALMERSTON N., July 26

Mr W. C. Harrington, F.I.A.N.Z. addressed a large meeting at the Palmerston North Luncheon Club to-day on business finance and income tax. He said that the trouble about the present income tax was that it struck a heavy blow at business finance and development. Many' Chambers of Commerce in New Zealand had included the matter in their programmes, but then discussions tended more to dwell upon the fringe of the subject, rather than the important features which lay at the heart of it.

He pointed out that business men with practical experience of the changeable conditions of trade should i be availed of by the Government; busi inoss men who were capable of eritieis- ! injr tax proposals, and who were -freJ seeing enough to expose any injurious i effects thereon.

POSITION OK DAIRY FACTORIES

Co-operative dairy factories, he said, now came under the provisions of the Act. and were taxed upon the balance

of profits set asfde in good years, ns a nest egg. to moot capital expenditure such as additions, etc. in lean years. The tax. though reasonably«<orroot in theory, was not going to assist directors who were pm-suing a policy of prudence. As dairy factories were tire manufacturers of a 'daily necessity which had to he placed on the market at the lowest possible cost, they, differed from other manufacturing concerns in that they were unable to pass this extra cost on to the consumers. The only possible tnonsure by which dairy companies can free themselves from the

tax on reserves is to divide them among the shareholders, and so shift the mat- ; ter from iis own shoulders on to each j individual shareholder. fTe disapproved ! of this course hv reason of the fact that the division of profits up to the hilt was

universally regarded as weakening a

company’s financial position. CIRCULATING CAPITAL SHRINKS. Income tax had gone up by needy 2SO per cent, and it was taxing the trading community to such an extent that further enterprise and the extensive use of capital for productive purposes was going to he stifled. In the many circumstances, with the fall in the price of raw material, which falls on the producer, and the slump in the prices of imported goods, which falls on the merchant, and the high cost of material and labour winch affects the manufacturers, and the increases in income tax levies imposes such a severe blow that companies find to-day theii circulating capital gradually shrinking. This is a, had sign, for when circulating capital roves out a business soon finds itself in difficulties in meeting its engagements as they become due.

BLOW AT DEVELOPMENT. The kepnote at the present time was production and development, yet the Oovernment, by disregarding all economic warnings, are striking a blow at {hat development which is so essential to the country’s well-being. Mr Harrington was accorded a hearty vote of thanks for his interesting address.