COMPANY TAXATION.

Taranaki Daily News, 10 September 1921, Page 4

COMPANY TAXATION.

Sir Francis Bell’s contention that the system of taxing companies’ earnings in the bulk is not detrimental to the interests of shareholders is challenged by some writers to the Auckland newspapers. One correspondent says the Acting Prime Minister has overlooked the fact that company shares have been falling in value owing to the excessive taxation that the companies Eave to pay. In this way holders are unable to take advantage of the high rates of interest of-' fering elsewhere. A still more telling point, in answer to the Minister’s assertion that small shareholders get the same dividends as they used to, and therefore suffer nothing through the system of taxation, is made by this correspondent’s statement that only last week lie received balance-sheets of two companies which ere paying no dividend this year owing “to the tremendous burden” of the company tax. Another writer says that the Waihi Grand Junction Gold Company has been paying super income tax for the last three years, and during that time the dividends have not only been reduced but have actually stopped. Sir Francis Bell’s claim was, in effect, that dividends have been maintained despite the enlarged taxation, but it would appear that while this may have been so in some cases it Was not in others, for here is q clear instance in which the Government has taken a company’s profits and left nothing for the shareholders, large or small. A third correspondent, ‘'Retired Farmer,” is “astounded at the audacity” of Sir Francis Bell’s statement that dividends have not been reduced, on account of taxation. He say^:—“l haw? 100 ordinary shares in a Farmers’ Co-operative Company (North Island), and have just received the annual balance-sheet, which states that there is no dividend, and to clear off a liability £2500 had to be taken from the reserve fund, which is now only £7500. When this reserve is gone, unless a just method of taxation is imposed, the company will have to gd bankrupt, and hundreds of farmers will be ruined. Ninety per cent, of the shareholders in this company are small struggling farmers. who. after paying their interest on mortgages, have less than £3OO per annum, and yet, under this cruel, unjust system of taxation they have to pay* about 10s in the £ before they can receive any dividends.”