TAX COMMISSION.

Hokitika Guardian, 1 May 1924, Page 1

TAX COMMISSION.

COM PA.NY TAXATION

UY TKf.KGUAI’H —I’Kll PRESS ASSOCIATION.]

DUNEDIN, April JtO. The Taxation Commission, comprising Justice Sim (Chairman), F. Khailor Weston (Wellington), W. D. Hunt t Wellington), and James Bcgg (Dunedin), continued its sittings to day in Dunedin.

The Commissioner ol taxes <D. 0. Clarke), was present, also the .Secretary of the Commission (K. C. Atkins).

The order of reference is as follows: “To inquire into the present system <>t land and income taxation in the Dominion in till its aspects, including the scope, rates, incidence oi the

several taxes, allowances and reliefs, assessments, appeals, collection and prevention ot evasion, and what alteiations of law are necessary or desirable and what effects any such alterations would have on the rates ol tax if it were necessary to maintain total yield of land tux and of income tax respectively. The ('(itiimission is required to report to the Prime Minister not later than May Hist, submitting the results of its investigations and any recommendation it thinks lit to name.

Koderick I'ineh. I’ublie Accountant, Oamani, said lie Imd made a study of the subject of taxation. The present method of levying income tax on companies as separate entities should ho adhered to, and no change over to the method of taxing dividends paid should he made. The federal taxation authorities, alter a thorough examination of all the systems of all company taxation, had deeided that the advantage- of equity of the present New Zealand system were such that they outweighed other methods. It a system was adopted of a company deducting tax when paying-outdividends and the taxpayer having to apply for a refund, anyone with experience or similar applications would have at# idea of the.amount iff trouble, correspondence and expense entailed. and the extremely unsatisfactory results which would finally eventuate. The luxation of individual shareholders would prevent company formation and picgre-.s. In spite ol the taxation being levied on. companies to; separate entities, it Imd heett the almost universal practice in New Zealand taut when the individual had developed his business to any great extent, he converted it into a company, either private or public. This custom largely accounted for the Commissioner's statement that fM per cent of till capital employed in trade was in the lorm ol companies, and only (I per cent in private hands. If the incidence of tax alien were changed, preference shareholders in companies would siiifer, while ordinary shareholders would gain increased dividends. To his mind, it would he almost an impossibility to so frame tin Act (which must necessarily deal with general principles') to avoid creating serious injustices and inequalities between classes of company shares, causing capital los-.'s to some holders, and capital profits to others.

Malcolm Stevenson, carrying iontractor. said that lie understood that if a jurmer owned th ■ trochoid. In was exempt from taxation on income 11 he was the lessee of a fa mi, he had to pay tax. lie was a leaseholder, and nnid income tax mi Ids farm. The lesser of the fit nil derived his. land tax from witness, lie did not see v.iiv leaseholders should pay and the freeholder lie exempt. lit* owned some house properly which returned him 21 t 0 ;; p ; .f cent on capital, and he was charged unearned income tax.

.Mr Clarke pointed out that the only income tax earned in this instance tv:*' owin'i 's and occupier's land, who were

dealing in live stock or . products. The leaseholder, as leaseholder was not liable for income tax. Regarding the second complaint, an allowance 1 of ") per cent on capital value was made. If Mr Stevenson were only earning \ per cent he could not he paying income tax. DUNEDIN, April (If) In answer to the Chairman, Mr Christie said that the graduated land tax had a healthy effect in stopping aggregation. Mr W. ].ce, a fanner, substantiated these statements, and said the real working farmer preferred land tax to income tax, though the large landowner preferred income tax to land tax.

Alfred Bell. Director of llallenstein Brothers, gave evidence on the subject of the incidence of the land tax, contending that city properties should lie taxed on a different principle from that apnlied to rural properties. TTe referred also to a fallacy that taxation could he passed on to the consumer. This was not so, as prices were regulated by competition. It seemed to them that if the land lax were abolished altogether, it would not ho a serious matter, as it amounted last year to less than 1J millions, which was a comparatively small item in the revenue of the Dominion.

In reply to .Mr ShirtcliH'e, witness said the remedy for any loss which would follow the abolition of the land tax would he to make it universal; and a Hat rate, instead of a graduated laud tax would he it satisfactory alternative. Walter Gow, a retired merchant, who was a member of the previous Taxation Commission, thought there should he a graduation of taxation. The man with larger moans should pay a larger proportion. They could not exclude income derived from land, and could not exclude the owner of it. hut they could preferentially tax him. He advocated the imposition of'a land tax without exemptions, and without regard to any mortgage on land.