THE INCOME TAX.

Taranaki Daily News, 17 March 1921, Page 6

THE INCOME TAX.

EFFECT ON COMPANIES. FARMERS MUCH CONCERNED. A. conference called by Mr. J./A Young, member for Waikato, to discuss the position regarding the new income tax proposals, with particular reference to their effect upbn co-operative concerns, was held at the offices of the Farmers’ Co-operative Co., Hamilton, las£ week. Mr. J. Barugh (chairman of directors) presided. Mr. Barugh said that the proposals were so drastic that companies like the Farmers’ Auctioneering Company were likely to be crippled unless the proposals were modified. With present taxation their money was costing them practical, ly an additional seven per cent to the average payment of seven per cent to their shareholders, making in all 14 per cent. The best prices that could be obtained from the freezing works for the various classes of sheep were very low and may yet be lower, and the farmers were going to be brought to their knees completely unless the Government revised its taxation. If the Government insisted on taxing on the present basis this and many similiar concerns would be forced into liquidation. Mr. C. A. Bushell (secretary to the company) pointed out that ‘all large companies under the legislation of last session would have to pay income tax on the maximum graduated rate of 8/9 3-5 in the pound. As this rate was only a nominal one, there being many charges which a well-managed business must place to the credit of its profit and loss account which are not allowed as deductions for income tax purposes, he ventured to say that with most companies the rate would work out nearer ten shillings in the pound. He then proceeded to give some facts and figures dealing with the company’s balance-sheet at January 31, 1921, showing that the Government would take by far the larger part of their net profits by way of land and income tax. He suggested that thej r should tell the shareholders frankly the reason for their failure This would bring up the question of whether they should continue in business, or simply go into liquidation, and return shareholders their capital. He thought it unnecessary to stress the effect this would have upon the Waikato and the districts wherein the company operated. After making a comparison of taxation in this country as compared with other countries, Mr. Bushell appealed to members individually and collectively, to use their influence with the Minister of Finance to modify the taxation proposals/and thus give*companies the “square deal” which had been the Reform slogan. If the basis rate of 8/9 3-5 in the pound could not be reduced, companies should get relief by more liberal exemptions, such as land tax, brokerage charges (on which the Government collected a double tax) subsidies to staff superannuation funds, and a more reasonable allowance made for depreciation, as the 2% per cent, allowed had never been sufficient. Further, failing the tax being levied on the individual shareholder, an exemption of three per cent, on the paid up capital should be allowed. Mr. H. S. Hawkins sa J d the taxation was a most drastic blow to the business community, and was hitting every company in exactly |he same way. The. total taxation for 1914 amounted to £5,900.000, while in 1919 it had risen to £ 13,<800,000 Of this amount the companies were contributing about half. He took exception to the extraordinary powers allowed the Commissioner.