COMPANY INCOME TAXATION.

Hokitika Guardian, 17 September 1921, Page 1

COMPANY INCOME TAXATION.

REPLY TO SIB FRANCIS BELL. BY t'HA.M HER OK COMMERCE. ’Hie mm li-discussed question oi company taxation was helore the Wellington Clinmher of Commerce again this week. The president a,.Mr .1. T. .liartin), challenged .statements made on the subject, by the Acting Biiiiie Min is lor (Sir Francis Bell), and iciternted the demand for a roiisiun of the iuci.leiice of taxation.

"Sir Francis Bell when in Auckland recently evidently though', it '■■■ccdieib to make certain slammer,;s in connection with company im.-nmr taxation which c.‘| l !iii:'l he allowed lo.go fori unchallenged." said Mi Martin. " I lie \:-t ing-Rl into Aiinistei slated that it would he quite ;;n:ioiS.!i e .o colic -'

the tax from the individual shntrho'dcr> instead of the company, v, by impossible:' It i> done in (Beat Britain and Australia, and if p: ss;li’o if- ••

why impossible hcivi' r i lie Acti»gI’rime M ioisiei ■ ;.11■ • ~ in j".- l a, ation of ike p.e> u! o.et: .• ! Is. it i.- c.isim an 1 enables a lie; e, .-He o! the probable revenue tu b. dc. It i' rail a lilies;ion el "bn: i- luo .asic-l. be I is U fail.-. • Ncv. incomcs on a gr.u 1 ;m < e ! S" ■■.: larger the income ii. • bi.ther the rii'i* o. :.nlion —tlie maximum being approximately : 's lid in the Lb I: is n.dmilled that the jusliliealioii for a graduated system of taxation is that a taxpayer contributes aeeordiug to his ability; in other words, the larger the income of the individual the higher the rate of taxation. The Hint of the trouble ill innmie taxation in Ncv. Zealand is the applieatinn "I the graduated nr progressive system ol taxation to the incone's ol companies. Cnmpanies are tivalcd a- individual taxpayers, and graduated tax la imposed accordingly, v.it!i ilm result that through companies small investors pay laxntion at the same late as large in- \ esters. Till'! SOURCE OK CoMI’LAiN'T. "Si: Krancis Bell stiles ilia! It would he nn.air o' -loi; r boldei.- i" charge Diem instead ol "'<■ i oiiipe nics. A company bolimgs to its O.nronuldrr*. : the size of the siiarcioldcis' dividend is rcguhileil by the profits that the company has available for dist ributiou, ami the actual unfairness lies in porpcipaling the present system ol charging the individual shareholder at too maximum rate of >-s !)d in the C, instead of the comparatively small rate which he would pay on rendering an account of his personal income. Kir Francis Bell states that no companies have reduced their dividend by leasnn of the tax. I can scarcely creilii ibis statement lo the Acliug-l’rimc .Minister. as lie study kn.c.i yor ought to lomu iliat not only have many eoinpanios lei luced 1 heir di\ ideiids. bill several arc paying none at all. and in the case of many ol those that arc paying reduced dividends they ale paying them out of reserves, and it must he patent lo everyone that this expedient has definite limitation--. "The Act.iug-Prime Minister states that the agitation tor a change in incidence of taxation is not I ruin the large investor, not liom the small iuveslor. hut from the managers ol companies, who are desirous ol shutting larger annual, net returns. I agree it is not from the large investor who is scoring at the expense ol Die small investor, hut it is at the instance ul the small investin' who is paying the same maximum rate ot Ss lid per Li income tax on his small investment as the wealthy man is paying oil his large investment, and it Kir Francis Bell tines not hear the insistent elamourings of these small shareholders as evinced at sliat ehold.-i s meetings ul

companies, al fanners’ union meetings, al chamber o! coniii-eivc and ii'duslnal as-.iciation meetings ihre'ighuu! tbicounlrc, tln'll all I call say is !l i- a clear case of t timing a deaf ea • Tic Govcrnmcui imM look to e that ii does not by cuntinuuiee ol il- iucs--.il attiliylc to companies dm up this source of revenue and accentuate the dillieuhies that aie las, eat''ering around this country. "I'NKYMVATHF.TK’ A' TTI TK I'K__ "ll is ieasiiuahh' to assume Dial v -ir Francis Bell’s slatcmcnts made in his capacity as Act ingf-M inisier ol i''iuancc ate the views of his linaneial advisers, and lII' his colleagues iu the Cabinet, and, if such is the case, il roust Is tl'.c uiisy m pat hot ic attitude ol the Goveiuilient towards one ul the most illlrtant subjects that must engage the attention of Rarlinmcnt ibis session, and emphasises Die necessity tor what me farnieis' unions, inereantile ai 1 uianiiI'acturing conceitls. and slia i elndders in all classes ot luisiiH'SS onleipiise have been claim Siring for. viz., a revision of tlm whole incidence oi ta.latino. such revision to be done by a competent boanl, comprising Govcrniiicnt cx|ici ts and loin or live ol the ablest linaneial business men in ! be country. Our Government ha- never shown luiieli disposilion to lie gun' d liv tiiisiness experts oiil'i-le I’arliament, and in ibis respect slums up unfa viiiirahly with Kngland and other count fit's. I would go I'm diet and rcI'omnieiid Dial not only Die tnecac I '■■ but Lite winilc linaneial position ol i'ns country lie carefully overhauled by Die suggested board. "I pro post* that the sccrclaiy i oaiinimicalo the opinion of this el, imber i to the newly apiminted Mim-ler ol j Fimiuce —the lion AY. I'owuie Kiewait. i -and Dint the matter be remiued to j the annual meeting of the Associated [ ChamlHMS of (’onmu rtv will j shortly he held ill Gliristrhuieli. i ■ AVI 1.1. NOT FACF. THE BOKITK'N." j Mr M. A. Carr endorsed what the j president tiad said. Ii was diHicult, ■ | u , a tailed, in understand why income taxation on companies should he stiller j,,.,-,. than in any othur part- ot the Em-

pire. lie believed the Government recognised that there were anomalies in the taxation of this country, hut the trouble was that it would not lace the position. Chambers of commerce had I,cen calling for years for a commission of investigation to consider the incidence of taxation. If they went tu the Government ami made representations regarding anomalies, they were immediately asked what substitute they had to offer. It was not fair that the onus of finding a substitute should be cast upon them. Ii was not sufficient moreover, to say that the present way of collecting taxes was an easy one.

One class of taxpayer had a suspicion that the other was not [laying iu proper share, because each class knew that anomalies existed. But the Government would not lace the position and appoint u body to go into the matter thoroughly. He believed that, it | the present svslem ol company taxation was carried on, many companies would have to go out of business. The Government would in that ease have "killed the goose that laid the golden egg.” and would have crippled enterprise and industry. TIIBKK QUESTIONS. Mr C. 11. Young, in the course o,' some remarks on the same subject, said that until lately the Board el . Trade had been coot lolling the profit's j of companies while the Government ] was taxing Litem, lie believed that il the hoard had made it it" business to see that each company set aside proper reserves and made adequate provision lor the future, it would have been doing better fur the country. He wtshou the Government to answer H'e t!, '-‘'e following questions: "(1) l Oder the present system of company taxation is a company shareholder likely to favoin tax-free dividends when such method is gradually impairing the business producing such dividends? fill Is it right lor an unfair method of taxation to prevail because .a fair and inst method is difficult in collection? CD Is the present, system ot company taxation strengthening or otherwise the secondary industries of the country ; it otherwise, is it not defeating the Government's purpose by impoverishing the source from which revenue is

sought?” The matter was hot further debated, the other members of the council being obviously in sympathy with the views expressed.