The Guardian (And Evening Star, with which is incorporated the West Coast Times.) WEDNESDAY, MAY 7th, 1924. PASSING ON TAXATION.

Hokitika Guardian, 7 May 1924, Page 2

The Guardian (And Evening Star, with which is incorporated the West Coast Times.) WEDNESDAY, MAY 7th, 1924. PASSING ON TAXATION.

Thk great evil of the New Zealand system of levying income tax, says a critic of our fiscal system, is that it departs entirely from the great principle of “equality of sacrifice”. It is not a graduated system of income tax at all. The 28 per cent of tax which came from individuals in 1921-22, while nominally collected on the graduated principle, was not really collected in that way,

many avenues being provided for individuals with large incomes to escape the operation of the graduated system. The 72 per cent collected from companies was merely a levy on the people the companies serve. It was in fact, simply taxation of the poor and those of moderate means, with the companies employed as tax-gatherers. It is a recognised fact that an individual tax on all individual incomes, such as that in force in Great Britain, cannot be passed on, but must be paid by those on whom it is levied. It is inevitable, however, that a sectional tax, such as tho company tax in New Zealand, must he passed on. It would he impossible for the companies to actually pay the tax themselves and to continue to carry on business. The London ‘•Economist” dealing with this subject last year, when it was being eagerly discussed in this country, laid it down as ail axiom that ‘‘the right sort of a tax was a general income tax on all classes of income.” “The incidence of a geneial income tax on all classes of income is regarded in economic theory,” it said, “as being capable of only a very slight shifting or diffusion, -that is to say it actually falls where it is intended to fall.” It was stated some time ago that if the present system of taxation wore continued it would not ho very long Indore tho public were bearing tho whole burden of the income tax in inequitable proportions. “Companies,” it was contended, “are created by individuals, are owned by individuals and remain in existence only so long ns their individual shareholders wish. It is evident. therefore, that if shareholders must pay ten and a half times as much tax on their company income ns on their other income, they will put their savings into companies. or let them remain in coinpau ios, only while these companies can collect. this extra tax from their customos. and thus pay to their shareholders at least ns good a return as tho shareholders could gid by investing their money in other directions. Any company that cannot do this will not he allowed to remain in existence very long. It will lie wound up and its capital returned to the shareholders. No proposed company will come into existence if it cannot show that it can pass til is tax on to those whom it is organised to serve. The public are now paying the hulk of the coniapny tax in New /calami through increased charges. If tlie- present system is maintained it will not be long before tile public ] ay the whole of the income tax. because only those companies that can pass tintax on will he allowed to continue business. The best informed opinion in the Dominion appears to incline stiongly towards this view.