TAXATION SYSTEM.

Hokitika Guardian, 9 August 1921, Page 1

TAXATION SYSTEM.

RADICAL AI ,TK RAT lON W A NTEI >. WELLINGTON. Aug. fi These days taxation is a live topic with commercial men, and at the annual meeting of the Wellington Chamber of Commerce reference to the subject was made by Mr A. Carr:— •'During the past six years,” said Mr Carr, “chambers of commerce have, both individually and in conference, consistently urged the Government to set up a small commission of inquiry to investigate methods of levying taxation in New Zealand, and to make recommendations with a view to removing many existing anomalies. “The whole system is crying out for reform. The method of assessment of income tax on the incomes ol companies lias been a constant source ot eciiiplaint. In my opinion, the method iidopted in New Zealand ot imposing graduated income tax is entirely wrong a s it is applied to the incomes of companies. The idea underlying graduated or progressive taxation is that tt heavier burden is put upon the weal-' thv. It is based upon the theory that the greater the income of the taxpayer, the greater the*sacrifice which lie can make. Many industries and commercial concerns in New Zealand can lie carried on only after very large capital expenditure and as limited companies To tax such incomes on a graduated scale simply because they have laige incomes is inflicting considerable injustice on the shareholders ol such companies. The great bulk ot these shareholders cannot he regarded a.s capitalists. It. must he a'very insignificant proportion that have inherited any wealth. What they have invested in companies is the result ol theii sn\iiirrs acquired through hard work. CHANGING CONDITIONS.

“It is perhaps true that during the war period it was possible for many of these companies to pay heavy gi< u }‘ lulled tax. and continue to return dividends to shareholders. A new era in trailing is. however, arriving; a period of keen competition in prices and a lower margin of profits. Any tax which is likely to he so onerous as to prevent ;i fair return on capital is. surely, against the interests of tlie community. |Fthe present system of imposing graduated income tax is to he continued it should 1)0 safeguarded by first allowing capital a fair return, ami imposing graduated taxation only upon the surplus over that fair return. TAXATION LIMIT REACHED. “1 quite realise that it will he necessary for many years to come to obtain very large revenue from income tax.” Mr Carr continued, “although il must be evident to us all that tor the next few years the return w.U he very much less than it lias been in the past three or four years. There is a limit to the taxation of industry and trade, and 1 believe that limit has been reached in New Zealand. Income taxation, on the present hifih scale at any rate, can only he continued provided there is very radical alteration in the methods adopted.’