TAXATION

Hokitika Guardian, 30 May 1928, Page 3

TAXATION

COMMERCIAL AI EX'S complaints. WELLINGTON. May 28. At the lucent conference at Christ, church of tlie Associated Chambers of Commerce, resolutions were passed protesting against ‘"-the continued ignoring by the Government of the recommendations of the Taxation Commission,” and expressing disappointment at the failure of the Government to give relief to income tax [layers in recent legislation. Tlie Minister of Finance, in reply, stales: “With reference to tlie statement that the Government continues to ignore tlie recommendations of its Taxation Commission I have to point out that a large number of recommendations hud the approval of tho Government and have been carried out. It is true that two major recommendations of tlie commission have not been adopted. They were: (I) That a. change should be made in tho method of taxation of income of companies, i.e., taxing shareholders on profits distributed as dividends and taxing the company at half rates on undistributed profits. (2) That the land tax should lie abolished.

“AVich regard to (I) I have to state that it was found that the loss of revenue involved was such that to meet il Ihe rate for individual taxpayers with taxable balances no to about £2OOO would require to lie dc.nihied, ami tho graduation accelerated to reach a maximum of 4s Gd at a much lower figure than at present. Tlie loss of revenue would lie greater so soon as methods of legal avoidance could he [nit in operation. The aim of taxpayers would tie to have as much as passible assessed to coinpanio at half late, and in this connection it should ha noted that about 70 per cent of companies are private companies, which do not necessarily distribute dividends to their shaiehnklers.

“With regard to (2) viz. that the land tax should lie aim.,islied, whatever the merits of this proposal I do not think i.t is within the range of practical politics at present. The land tax is regarded by the majority of farmers as a fair substitute for income tax. It represents a stable source of revenue when incomes show a Temporary downward and fluctuating tendency. It furnishes a partial solution to the question of the unearned increment, and has the support of public opinion.

“Concerning the protests against surpluses budgeted for in the last sixyears being used for reduction of debt rather than reduction of taxation, I have to paint out first of a'l that in tlie period mentioned there were very considerable reductions in taxation ; in fact between 1921 and 1925 tho maximum rate of incme tax was reduced from 8s 9d to 4s Gd in the £l. Secondly, the application of surplus revenue to capital purposes has not been confined to the- pa»t-n-«r period. T.irjo sums were regularly irauslem-d to tho Public AYorks Fund in pre-war days, and thus obviated tho spending of an equivalent amount of loan money on purposes that were necessary, but financially unproductive. It must, T think, lie admitted that this is sound in principle.”