LEVY ON WAR WEALTH.

Southland Times, Issue 18824, 18 May 1920, Page 4

LEVY ON WAR WEALTH.

Although the committee appointed by the Imperial Government has reported that the scheme prapered by the Board of Inland Revenue for a levy on “war wealth® is practicable, it has advised the government that the application of the levy is unsound in principle and calculated, to affect industry - injuriously. The report was not unexpected. When one comes to consider the disturbing effect that such a levy would have upon the financial and industrial world, the return aimed at, some £55,000,000, is very small and not worth the effort. We are inclined in these days to look upon large sums of money with less greed than formerly and even the chance to obtain £55,000,000 to-day must be examined from the point of view of the value of the results compared with the cost of the collection. The position in Britain, course, is entirely dissimilar from that in New Zealand. Here all income, whether it is paid out in dividends or passed inito company reserves, has to undergo taxation and, therefore, when it appears in the form of capital in the subsequent years, it has already paid its proportion to the (Country’s revenue. In Britain the dividends paid out to a shareholder are taxed t/s part of that shareholder’s income, but the re-

serves of companies evidently escape any, burden until they are distributed in cash. The recent judgment in England showed that the distribution of these reserves in the form of shares does not bring them within, the scope of the income tax, and it is to be presumed that the levy on, war wealth would really seek to place an impost on the “capital” thus accumulated during the war period. In the Old Country incomes have been made to bear a large proportion of the annual charges and they are still subjected to heavy imposts. It is argued that if on top of these imposts, people were compelled to realise their assets, they would suffer severe losses because of the disturbing effect their action would have on the market and they .would also depress the assets of people at whom the levy is not aimed. The results of a levy on capital at this stage would be difficult to estimate, but it is a remarkable fact that practical financial men are virtually unanimous in condemning this form of taxation, not because they feel that capital has any right to immunity, but because the danger of throwing the industrial world and money market into disorder is too great to be risked for £55.000,000. Evidently the Imperial Government’s special committee has seen the force of th;s argument and has accepted the theories of the economists on the subject, while pointing out that if they are put into practice they will have more serious results than the professors anticipate. It is probable that the levy on wealth will now cease to disturb the British political world.