BURDEN OF TAX

Otago Daily Times, Issue 24424, 9 October 1940, Page 6

BURDEN OF TAX

PENALTY ON ENTERPRISE OPPOSITION OPINIONS BASIS FOR DISCUSSION DEFINITION OF EXCESS PROFIT (From Our Parliamentary Reporter! WELLINGTON. Oct. 8. The opinion that manufacturers ami farmers would carry most of the burden of the proposed laa on excess profits was expressed by the Leader of the Opposition (Mr Adam Hamilton) during the debate on the Excess Profits Tax Bill in the House of Representatives tonight. Mr Hamilton, who followed the Minister of Finance (Mr Nash), said the Bill was an attempt to meet a very difficult and intricate situation and provided a basis for reasonable discussion. The Minister had made a good case for the Bill. Mr Hamilton said. His statement that the measure did not discourage production, however, was open to question. General taxation was about as high in New Zealand as anywhere, and. with the compulsory loan for war purposes and the excess profits tax, people with capital would be reluctant to invest their money in new enterprises, preferring to leave it lying in the bank.. The individual who operated his capital should be encouraged. “ I should not be surprised if this is another tax to catch the energetic and industrious,” said Mr Hamilton. “ There are two classes of useful people who will bear the major burden of this tax—the manufacturers and the farmers—because both have been asked to spur up and increase production.”

Mr A. G. Osborne (Govt., Onehunga): Workers in factories will make a contribution.

Mr Hamilton: They have been allowed something extra for their labour.

Profits and Salaries

“ Profits in themselves are not wrong,” Mr Hamilton continued. “This Bill, in a sense, actually defines profits but not excess profits. There is an attempt to stigmatise the term profit and make it an objectionable word. To some people profit is salary, and it might be less than that received by a person whose income is classified as salary. Extra profits as a result of the war can reasonably be considered for a special form of taxation. The public does not like the idea of profits made because of the war, but the problem is to find a just basis for taxation." The difficulty is to get a correct definition of what is excess profit so as not to catch ary taxpayer unfairly.” British legislation dealing with excess profits, Mr Hamilton said, had gone into much greater detail than that introduced by the Minister. The taxpayer liked to knew the limit of his liability and the nature of his assessment. New Zealand’s position was very different from that in Great Britain, which was a large industrial country. With > so many industries engaged in war work, no doubt there would be cases in Britain of excessive profits resulting from war work, but he did not think a situation like that was likely in New Zealand. The Government had ,„ower to control profiteering and, if the Bill meant anything, it was an admission that the Profiteering Act and price fixation had failed.

“A Strange Anomaly”

Mr Hamilton' said the Bill would penalise the heavily mortgaged farmer as compared with the mian free of debt. An individual with all free assets would get a much better standard income. That was a strange anomaly for a Labour Government. A wealthy person was to be given a better deal than the poor one. “The personnel of the committee to hear the appeals is all important,” said Mr Hamilton. “If the Minister appoints a committee in which taxpayers have confidence it may meet the position fairly well, but should theorists be appointed, that confidence will be lacking. The personnel of the committee will be able to give a lot of confidence in the operation of the Bill or may create fear in the minds of the taxpayers.”