LOCAL BODY LOANS

Hokitika Guardian, 25 November 1933, Page 5

LOCAL BODY LOANS

LONDON’S DEMANDS

FINANCE MINISTER'S OPINION

(Per Pi ess Association — Copyright.)

WELLINGTON, November .24. Mr Coates was interviewed to-night in regard to cabled information from London to the effect tlnu the London (Stock Exchange market requires all future colonial local body issues to ,express the principal and interest as payable in sterling, and ;o be free from all domestic taxation, present and future. , the Minister of Finance' stated he regretted very much that any statement had been made in the press in regard to the matter.

“I am in the position to say,” said

Mr Coates, “that cabled information A vas received by the Government this

morning to this effect, and a reply has been sent to the High Commissioner. Briefly the Government has no objection whatever to local body issues ill London containing an express provision for payment of principal and interest in steading in London only, and, in fact, the Government believes that thi s is a right and proper course ror local bodies to take. I think that has been made clear -ill connection with specific issues of local bodies. What the London Stock Exchange, apparently, now desires is for bonds in respect of future i?»ues to contain a definite and specific agreement for payments in London in sterling. “A s to the second question of freedom from domestic taxation, present and 'future, the Government can adopt no other attitude but that this is a matter fo r arrangement between the borrowing local authority and the lender; and any statement in a local body prospectus to the effect that the issue will ibe free from domestic taxa-' tion, present or future, cannot possibly bind present or future Governments.

"I consider,” continued Mr Coates, “that, if any local body issues a prospectus that bonds ai'e to be free of all domestic taxation, present or future, the local body itself must be responsible for any taxation that may be imposed by future Governments, and 1 desire to stress this point. “1 hasten to ■add,” said Mr Coates, ‘•that the present' Government has no intention of imposing any taxation on this class of 'bond. The Government is of opinion that any local body which includes a;’statement of this natuiV in its prospectus thereby logically undertakes to pay any tax y-V’.vi may be levied in 'future, so that the. lender shall get actually the return specified in the contract. As the lav stands at present, there i s no taxation on this class of bond. “I feel bound to say, continued Mr Coates, that any local body should undoubtedly make it clear that freedom from domestic taxation should inure only for the benefit of holders domiciled beyond the Dominion.”

Concluding, Mr Coates stated: ,£ No announcement has been made to the press in New Zealand iby the Government, as it is felt the matter is not one to which any publicity should he given at- this stage, as it would tend to create altogether a false impression, particularly as negotiations which gave rise to the cable are incomplete.