TERMS OF NEXT WAR LOAN.

Taihape Daily Times, 5 January 1918, Page 5

TERMS OF NEXT WAR LOAN.

QUESTION OF INCOME TAX. 5 The question of exempting war loan investments from income tax was discussed by Sir Joseph W v ard in Christchurch recently. “The responsibility of the Government of this country in war time is very great,” said the Minister, “and it is of the utmost importance from the standpoint of every class of the community, from the humblest to the highest, that nothing should be done by the Government to create a high rate of interest. It is also important to obtain the ’necessary amount of money for the next war loan to be issued in March, apart from that already subscribed for war purposes. If the Government accepted suggestions that have been made it could make the interest on the war loan 51 or even 6 per cent., subject to income tax. That would have the immediate effect, from one end of the country to the other, of making the rate of interest on ordinary transactions go up by 2| to 4| per cent, more than the Government rate, with the inevitable result not only of creating a tight

money market, but traders of every

class requiring money—as most of them do —would be compelled to raise the prices of the commodities, fob'S included, they were selling in New Zealand. How .those people who are apparently desirous of keeping down the cost of living could advocate a •policy having such results is to my mind incomprehensible.”

Sir Joseph added that he regarded keeping the rates for money down to the lowest possible limit as a duty of the greatest importance and he was not prepared to be a party to any policy that would have a strangling effect on the industrial and com-, mereial life of the country during the war period. The rates of interest charged by the Advances to Settlers Department and the Advances to Workers Department had been maintained at 41 per cent, throughout the war period, and there- was no intention of increasing the rate, but if the Government put a war loan on*the market at 54 per cent or even higher, as advised by some people, it would not be possible to lend out money by those departments at the present rate of interest. As a matter of fact? if the Government -were to adopt a higher rate of interest it would bo necessary for all the banking and financial institutions to increase their deposit rates in order to hold money for advances. That would be the beginning of a financial panic throughout the Dominion. The British Government ( it might be mentioned, incidentally, ; had made its recent successful war i loans free of income tax, and America j was acting in a similar way.