MASKED TACTICS

Wairarapa Times-Age, 3 September 1938, Page 5

MASKED TACTICS

COMPANIES AND SECURITY TAX STRONG PROTEST BY EXCHANGE CHAIRMAN. BLOW TO SMALL SHAREHOLDER. (By Telegraph—Press Association.) CHRISTCHURCH, Sept. 2. That Stock Exchange values had fallen appreciably immediately on receipt of the news of the' amendments was claimed by Mr. H. Kitson, chairman of the Stock Exchange Association of New Zealand, when commenting this evening on the amendments which bring companies into the scope of social security taxation. Mr. Kitson, who said that he had the unanimous support of the stock exchanges of New Zealand in his attitude, protested strongly against the Government masking its intentions to bring companies into the taxation until the third reading of the Social Security Bill. “This practically prevents company executives from placing before the Government their representations about the effect of the amendment,” Mr Kitson said. “Of all the increases that have been made in company taxation, I do not think that any has come with practicaly no warning as in this case. It is all the more disturbing since the Government had so many opportunities of advising the commercial community of its intentions. “It ought also to be realised that in these amendment the Government is departing entirely from the essence of its justification for social security. That is, that those who paid the taxation should receive the benefits —medical and financial. No company wants medical attention and none will get financial asistance. - CHECK TO EXPANSION. “The heavy increase in taxation must mean that the commercial expansion of companies in New Zealand will be seriously retarded. In some cases this taxation may be passed on in higher prices for manufactured goods thus increasing the cost of living. The contraction of national wealth must also be very considerable if this new provision is persisted in. The adverse effect of the new taxation on the share of companies in this national wealth will be not less than 10 per cent. This has already been shown by the serious drop in prices on to-day’s markets, not only in companies directly affected by the new taxation, ..but also in bank shares, which are exempt from this particular tax, but which naturally suffer from any repercussion on other companies. A SPECIFIC EXAMPLE. “The effect of the taxation on one particular company whose figures I took out to-day, will show the general effect,” Mr Kitson said. “On its figures for the last year this ' hew taxation will involve a payment of approximately £4500. If the taxation was on the basis of individual shareholders and their dividends, the payment would be £693. I would suggest that when companies send dividend statements to their shareholders in future they should show the amounts that have been deducted by the Government for taxation, so that the small shareholder would realise the amount of taxation they are paying. One of. the features of this new taxation is that it will hit the medium to small shareholder harder than larger companies. “Then what is going to be the ultimate fate of those superannuation funds already and being generously subsidised by companies. “And what about future investments in sound enterprises. Stock exchanges throughout New Zealand have used every endeavour to guide investors into New Zealand-controlled and owned companies, and this additional taxation, will make it exceedingly difficult for them to justify continuing to do so. Further, it will frighten away any capital at all inclined to invest in New Zealand securities.” OPINION IN WELLINGTON. NEW FACTOR RAISING COSTS AND PRICES. (By Telegraph —Press Association.) WELLINGTON, This Day. Managers of large wholesale and retail firms in Wellington, interviewed yesterday, stated that the extra cost that the new tax on companies would represent would certainly have to be passed on to the public in the form of increased prices. . The manager of a large importing and retail store said the announcement of the proposal had created a tremendous stir in business circles in the city, and must have the gravest repercussions against the Government. The managing director of another establishment said the proposal would result in adding still more to the difficulties that business firms had to contend with through the general rise in costs that had taken place durmg the last three years. Retail turnover had failed to keep pace with the increase in costs, he said. “Retail business was just beginning to experience a very welcome boom, with figures increasing every week up to the time of the last general election,” he said, “but since then it has become increasingly difficult to carry on, let alone make a reasonable margin of profit.”