TAXING WAR PROFITS.

Taranaki Daily News, 30 June 1916, Page 7

TAXING WAR PROFITS.

FORECAST OF THE BILL. BASIS OF.ASSESSMENT. PROBABLE EXEMPTIONS. Wellington, Wednesday. The Finance Bill, to be introduced in the House of Representatives this week, contains provision for the assessment of tax on war profits. The measure will contain 25 clauses. It will differ in important respects from the British and Australian Acts, but its authors claim that full provision is being made to ensure that in the levying of the tax of 4o per cent, no injustices will be inflicted.

The basis of assesment will be the difference between the war profit and the average profit for the three years preceding the war, but there are many exception to be met. It is recognised that it would not be fair, for instance, to charge as war profits these profits which are the result of the expenditure of increased copital, and the case of those businesses which have increased their capital will be met. There will he an exemption from taxation as war profits of a stated amount of profit. In England and Australia, the omount is £2OO. Here, it seems probable that as our in-come-tax exemption is D3OO, thir may be the exemption allowed for this special war tax It has been pointed out that a business, though earning a considerable income, is yet earning only a very small percentage on the capital 'invested.

APPEAL TO MAGISTRATES. It is understood that provision is to be made for the exemption from war tax of such profit as may be sufficient to return only a defined percentage on the capital. In Australia the exempted percentage is 0 per cent, for joint stock companies and 7 per cent, for private individuals. Probably the same exemption will be allowed here. There will be certain exempted classes. In. Australia the classes exempt are municipal and other public authorities, friendly societies, religious, charitable and educational organisations, agriculturists, and offices or employments and professions in which profits depend mainly on the personal qualifications of the individual. Agriculturists in this exemption list do not include pastor-ali-ts and dairy farmers. It is understodo that no board of appeal will be ap pointed under the Act. The process of appeal will be bj- application to a Magistrate, who will hear and determine all appeals against allegedly unfair assessment.

It has been stated that the Government intended' to limit rates of interest under this Bill. A great many people I* ve understood that the Government had some such ideo, but it is no\\ stated definitely that the Bill will not deal with the rates of interest on privnte advances. It will deal with the rates of interest that banks will be allowed to offer for deposits.

PATRIOTIC CONTRIBUTIONS. The Bill not also provide for the is. sue of war bonds and for the limitation of New Zealand investments abroad. It is understood that the Bill does not make any provision in the assessment of war profits for the exemption of amounts contributed to patriotic fi">» It was originally intended to introduce the Bill to-morrow, hut the probabilities now ore that its introduction will be delayed tilul later in the week. The Bill was considered by Cabinet to-night, and it will be further considered at another Cabinet meeting to-morrow. The method of giving effect to the proposals is very complicated, and many difficulties have to be overcome.