The Daily News. SATURDAY, AUGUST 12, 1922. TAXATION.

Taranaki Daily News, 12 August 1922, Page 4

The Daily News. SATURDAY, AUGUST 12, 1922. TAXATION.

'The report of the special committee appointed to inquire into the question of taxation is very much on the lines that might have been expected, inasmuch to a large extent it follows the lines that have been stressed by the leading business men and journals o t f ' the country. No other conclusion was possible than that the first step towards reducing taxation was the imperative necessity for substantial economies in administration, beyond those which have already been indicated, but as yet have not made much material difference in the direction of balancing revenue and expenditure. With a genera) election pending, it is hardly to be expected that a drastic application of the pruning knife will be in evidence, though it may be confidently anticipated that when votes at the ballot box have been cast, there will be a speeding up of retrenchment. Having emphasised the imperative need for the utmost economy, the committee then favors the income tax maximum Ik g not greater than five shillings in the pound. The intention of this recommendation is, doubtless, commendable, yet its soundness is open to question, inasmuch as some business concerns which have practically a monopoly and make huge profits out of the public—and sometimes out of the pressing needs of the public' —ought fairly to be subject to a much higher rate, while traders, producers and those engaged in developing the resources ol' the country may properly be let off i with as low a.rate as is possible. ! In the alternative the former class might well be assessed on their gross profits and the latter on their net profits. Admittedly the drawing of the line between the two would be difficult. It is satisfactory to note that the committee favors the carrying forward of losses, and that Josses made in one direction shall be placed against profits made in another. Tliis ift now the case “in England, the income being assessed on the average of three years' returns. The justice of such a system speaks for itself, as does the suggestion that interest from company and public body debentures should be taxed at the same rate as income from other sources. Those who would make a difference between earned and unearned revenue fail to grasp the proper mission of capital. For productive purposes capital is essential and this capital can only be forth.coming as the result of work and saving, even if inherited. Hence the investment of capital in reproductive enterprises should be encouraged and not discouraged by heavy taxes. The reason why American and other exchanges have moved against the British Empire is that Britain has been consuming more than she

duced, and it has to be realised that the credit of the nation is hound up with the capacity and honesty of the individual. The recommendation that all Government and public body trading undertakings should be subject to land and income taxes will meet with approval, as will the suggestion that life insurance companies should be taxed on the same basis as ordinary trading and commercial companies. The recognition of the principle of allowances, for wasting assets of sawmillers and coal mine owners appears to be equitable. The committee’s recommendations as to the abolition of the super-tax on land requires very careful consideration in view of the need for sub-divi-sion of large estates, and this remark also applies to the proposed abolition of the graduation principle, even under the safeguard of reductions for smaller holdings, which would practically perpetuate the graduated tax. In regard to company taxation, over the incidence of which there has of late been considerable discussion, the special committee is not unanimous in its recommendations. The majority favor the taxation of shareholders on their dividends-—* individual taxation—and the taxation of the companies on their undivided profits only, as is done in most other British countries. A minority favor taxation of companies direct, a perpetuation of the present unfair and unsatisfactory system. The Government must make a material change in the system, for by heavy, arbitrary taxation it has pretty effectually dried up the sources of wealth of the companies operating in a big way in New Zealand. It has about ‘‘killed the goose that lays the golden egg.” This was inevitable when companies were called upon tX hand over to the Government nearly half of their supposed profits. Britain saw the danger in time, and reduced taxation, and so must New Zealand, where the 1 burden is more onerous in the case of companies with large turnovers than at Home. The report up the whole exhibits a desire to improve the present system, and it is to be hoped that Parliament will this session do something to definitely and substantially reduce taxation.