TAXATION COMMISSION

Hokitika Guardian, 17 April 1924, Page 4

TAXATION COMMISSION

COMMISSIONER’S EVIDENCE

WELLINGTON, April 15

The Taxation Commission resumed its sittings this morning, when the Commissioner of Taxes (Mr D. G. Clark) gave at considerable length his opinion upon present taxation, and made suggestions for improvement. “It was suggested,” said Mr Clark, that T might- have an ideal system of taxation to submit. T must confess that I have not, nor do I think such a thing can he attained even if there was universal agreement as to what was an ideal system, which is far from the

case. I believe the amount of elaborate detail that would be required foi it-s administration would be revolting to the average mind.”

Mr Clark said he agreed with l’e school of thought which admitted there were inequalities and injustices, and contended that these should not be corrected by taxation, but that taxation should be in accordance with faculty and should be proportional to income- as a. measure ?if faculty. The idea of this school was that taxation should be used for revenue purposes only. We lmd progressive taxation in cur system. He did not propose to attempt to defend it on the score that it was for the nurpose of correcting inequalities in the distribution of wealth. His grounds of defence were that the action of indirect taxes was repressive, that was. they fell more heavily on smaller incomes. To strike a balance one required progressive taxes on income, so as to bring out- tile really proportional system of taxation in accordance with faculty. He expected from that land

After reviewing the psesent system <if taxation, Mr Clark advocated a land tax levied on a Hat rate osi the unimproved value of all land in excess of £SOO or, if thought advisable, in excess of £I(XK> on the same basis as the levy of local rates without reference to mortgage indebtedness, allowance for which can be made by the deduction of interest in the assessment of income. He advocated a general income-tax on income from all sources, including income from land debentures at the same progressive rate, or of similar progressive rates, to those in use at present. He thought that the i exemption of income from land was a I retrograde step, as he thought it advisable to make no exceptions whatever in ; the assessment of income-tax. The ■ more general a tax could ho made the 1 less probability there was, he thought, of there being any shifting from the tax. The tax on debentures should be uniform with the tax on from other sources. Another suggestion, if such a system were adopted, would enable considerable deductions to bo made in the present general rate. There was a difficulty in connexion with the exemption of income ■ from War iLoan stock. It had been suggested that this should he aggregated with the taxpayers’ other income in order to fix the rate, hut this suggestion had I been rejected by Parliament. In the United States, where the difficulty in this connexion was much greater than here, attempts had been made to abolish the exemption of tax-free securities, but had been rejected by Congress. In any case, it would take about 15 years to bring about the necessary alteration of the- law there. It might be worth while to consider the redemption of these securities in New Zealand by the issue of unexempted securities at a- slightly higher rate of interest. He believed the Government had power to redeem them before maturity. The assessment of companies had raisod considerable discussion. I thought we were consistent in treating companies as persons. While, companies had played an important past in the development of the country, they had their disadvantages. Shareholders took no personal risk and had nothing to do with the management, which was in other bands. There was a danger of reckless trading, and an additional evil was stock exchange gambling in shares. The Committee adjourned until April 29th.. when it will meet in Dunedin.