PROPOSED NEW TAXES

Hokitika Guardian, 4 August 1930, Page 7

PROPOSED NEW TAXES

i LIFE INSURANCE SOCIETIES. EFFECT OF HIGHER. LEVIES, WELLINGTON, July 31. The new taxation proposals of tne Government will seriously affect trie finances of insurance companies. The main objection is that the increased impost amount to a tax on the thrift oi. poiu-ymiiUe.s. A statement reviewing the effect of the Government's Bud* get proposals has been issued by the .vusirauan .viutuul Provident Society. “The tax,” says the statement, “is an unfair penalty on a form of thrift that should be encouraged by the Government in every possible way, as it is the means of, saving the Government from this payment of large sums of money to widows and orphans who would otherwise be thrown on the State to support. The average rile policy is under £2OO and the majority of policies are held by persons whose incomes are too small to be taxable. Yet by taxing life assurance companies the Government is indirectly taxing the small, savings of those unfortunate individuals who are endeavouring to the best of their ability to provide for those dependent on them. , DEATH DUTIES,

“As a result of the activities of the life offices the Dominion already obtains. considerable revenue annually from succession duties on the proceeds of life assurance policies, “Principally married men with families effect life policies, and they are already taxed heavily enough in other ways. Any tax upon a life office necessarily diminishes by that sum, compounded at interest, the amount of insurance protection which the premiums will purchase. The essential principle of life assurance is ‘protection’ and not profit, and a life office should therefore be pt least on the absolute minimum basis of taxation, if not entirely exempted therefrom. The tendency throughout the world is to relieve the life assurance societies from income tax, as'they 'should be no more liable to it than the Savings Bank on friendly societies, being worked on the same basis for the sole benefit of the policyholders, and even more beneficial to the community generally. BASIS CHALLENGED. “The Government should be satis-’ fled with the increase under the other provisions, which will mean an addition of £3OOO to £4,000 to the Australian Mutual Provident Society for this year, or £SOOO to £6OOO over the amount paid in 1929, although the surplus dividend among the policyholders was less. The propsed alteration wouffl almost double our taxation, and the A.M.P, Society alone pays between £17,000 and £IB,OOO in income tax,

Now it must not be overlooked that the rates, of premium charged by the life offices are not uniform, and consequently those who charge the lower rates would pity less taxation, although the others return the surplus of pfeihiums paid in additional bonuses each year. It is now recognised that interest is the only fair basis for income tax, and the Government Life Dbartpment should be taxed on it the same as the other life assurance societies. The Federal Government, the New South Wales Government, and the West Australian Government all charge on interest.- The industrial policyholders could not possibly pay on 25 per cent of the premium receipts.