WELLINGTON NOTES

Hokitika Guardian, 7 May 1923, Page 1

WELLINGTON NOTES

COMPANY TAXATION. MR MASSEY TAKES A HAND. e [Special To The Guardian.] v ' : -Wellington, alu- l , Having effectually disposed of Air j George Shirtclifi'e, one of liis dissenting colleagues on the Taxation Com- / mission, in their lit tie tilt over the ■ New Zealand system of company taxation, .Mr W .1). Hunt is now eonI fronted by a still more doughty controversialist in the person of the Prime .Minister himself. On Wednesday last hv the special invitation of the Dominion Executive of the Farmers’ Cnion, Mr Hunt addressed the members of that, body on this burning question anil covered much of the ground he had traversed in his tilt with Air Sliirtclid’e. By wav of elaboration lie introduced one or two new aspects of the question. There wa.s a wave of extravagance going on among local bodies, ho said, which would one day have to he paid for in wool, meal and butter. The wealthy man in the city was having a particularly good time just now. The present system was being allowed to go on beeausi tlie wealthy people in the city wanted it to go on, and the politicians wanted it to go on because it enabled them to

collect a large amount of taxation from the public, without, the public knowing exactly how the money was obtained. ECONOMY. This brought a half huinourolls protest from a member of the Executive. “You will ruin Mr Massey,” ATr AV. B. Af.athe.son exclaimed, -‘if you go on telling all these secrets.” AH TTunt. however, was undeterred. The Government:, lie continued, should he loreed to economise. No Government would economise so long as it could j get money to spend. Economy was an unpopular policy. The farmer could noi pass anything on. He had to sell his meat and butter in countries which taxed on the individual system. The farmer wondered what was hurting him. There was a good deal of misapprehension about the land lax. Every farmer, excepting the very wealthy, and the very small ones, were better off with land and income tax than they would he with income lax alone. The company tax last year ran into live millions, which. speaking broadly, had been passed on to the farmers with profits added. The individual tax would not be passed on tn this way. Air Hunt concluded by expressing a wish that lie could have ait opportunity, with a few others, to work economies in the public expenditure.. fn the .Mother Country this task had been entrusted to a committee of business men and the expenditure bad come down by leaps and bounds. ah; aiassey in reply. The Prime AL'nister lost no time in replying to Air Hunt’s indictment.

“-Mr Hunt’s scheme of taxation,” lie declares in a statement appearing in the morning papers to-day, “is in bolster up the strong combines with large capital at their command and make them .-till stronger, the natural result of which would bo the shutting out of the individual trader completely, and in (lie end the exploitation of both the producer and the consumer.” Tlieii Air Alassev proceeds to deal wltn Air Hunt's contentious in detail. “New Zealand is not the only country that taxes companies,” he says.” In nearly

till other countries the company is taxed through a corporation tax, and the individual shareholder is also (axed on his dividends. Jfe states that ’one could not borrow mouev and [end :t to farmers at less than £.4 !2s Go per coni.’ The reply lo ibis is that many purely investment companies are doing so and paying good dividends to their shareholders, hut these companies did not themselves raise money and guarantee (heir lenders 7.1

per cent free of income tax, nor did they entertain advancing money on speculative land values.” The doctors differ very widely Pore and Air A f assey has not yet finished. THE OTHER VIEW.

Mr Massey deals with the charge of extravagance hy reiterating his previous statements on the subject. “Mr limit, lie* says, “quotes the* cost * f running the Dominion as Oh POO, 000 in the year before the war; Cl 1 ~'187,000 in 1912-19; and C12,.* 100,000 in J92.1-2*2. 2*2. The above figures represent expenditure, less interest and sinking fund charges and war pensions. The increase* from the year before the war up to 191 ft is not above the normal, and the increase from 1919 to 15)22 of L7.(100,COO has been frequently explained hy me in my Budgets and public* statements as clue to the in--11 a ted values which affected wages, material, and all commodities paid for by the Government during the post-war years. Those high prices were not. only a burden on the Government during that time, hut affected nil financial institutions, as Mr Hunt must know as well ns any one else, ft is useless referring to this increase of 07,000,000 since 1919 as an Instance of the Government's inability to manage the country, as it covers the period of ■peak’ prices and wages." There the matter rests for the present, hut it is: not unlikely more will he heard about it before the controversialists reach an agreement.