WAR LOAN

Otago Daily Times, Issue 24415, 28 September 1940, Page 12

WAR LOAN

EFFECT ON INDUSTRY A SECTIONAL BURDEN NOTE OF APPREHENSION (Special to Daily Times) WELLINGTON, Sept. 27. “ There can be no doubt that the terms of the war loan will present grave and embarrassing problems to many individuals and to many companies,” said Mr R. H. Nimmo, president of the Wellington Chamber of Commerce, to-day. “It is quite obvious that participation in this loan is not as equitable as might reasonably be expected, for those lending money free of interest to the Government will once again be the individuals and companies on the higher income mark, a section of the community already staggering under a crushing burden of taxation. “When analysed, it appears to be a misnomer in one sense to call it a loan.” Mr Nimmo said, “as for the next four years it really represents an extra turn of the taxation screw, which is accentuated by the problem which will face many individuals and companies, who will need to borrow to make their contribution. ■ The best rate available from loaning institutions is 4-J per cent, on first-class security, which will, in effect, be additional taxation for those who are in the happy position of being able to offer such security. Difficulties of Industry “ Many applicants, however, will not be in such a position,” he said, “and it is difficult to understand just how they will face up to their obligations. This will be particularly so in the case of many firms which made good profits during the year ended March 31, 1939, on which year the compulsory provisions are based, but which since that year, because of the import restrictions and the war, have shown a considerable decline in turnover and profits. “While admitting that it is the duty and privilege of industry and commerce cheerfully to bear whatever sacrifice they may be called upon by the Government to carry for the successful prosecution of the war, it must be borne in mind,” Mr Nimmo said, “that the sky is not the limit so far as taxation is concerned. If this is to be the policy of the Government for the duration of the war. then this present loan is only a first instalment and probably a very small portion of what is vet to come. Can the same seer tion of the .community continue to pay? Spread of Liability In the light of these facts with all their probable repercussions,” Mr Nimmo concluded, “ the Government must face up squarely to the position that it is an utter impossibility for the present generation to meet the major portion of the costs of this war out of income. The liabilities of this war, as with other wars, must be spread over future generations. If industry and commerce are to play their part towards the winning of the war care must be taken by the Government not to strangle them out of existence, and it seems to me that the provisions of this compulsory loan must certainly indicate that the strangling process, already begun, is being continued with unabatedseverity.”