TAXATION ON CAPITAL

Rotorua Morning Post, Volume 2, Issue 519, 1 May 1933, Page 4

TAXATION ON CAPITAL

Addressing the Insurance Institute of London, Sir William McLintock remarked that as a lea|rned judge had stated, in-, come tax was a tax on income. This "startling proposition" was, of course, only true in the restricted sense in which income was computed under the Income Tax Acts for if income were understood in a commercial sense, it "would^ be found that income tax was, in many cases, a tax on capital. An obvious example of this was the assessment to income tax of the profits of mining and similar concerns without making any allowance for the exhaustion of their properties, the latter being treate'd AS capital expenditure, even though'at the end of the lease or concession it was valueless. A somewhat similar example was pro-

vided by the annuity business of life assuranee companies. Although income tax, likd the poor, was always with.iis, it Was surpiising, as Mr. Justice Rowlatt remarked not long ago, how ff equently people overlooked its effect on their ordinary daily transactions of any importance in wliich the effect of income tax could be lef t ou'f of account, and the same might be said of many transactions of a .private and domestic nature.