Wirarapa Times-Age THURSDAY, OCTOBER 6, 1938. PENALTIES ON ENTERPRISE.

Wairarapa Times-Age, 6 October 1938, Page 6

Wirarapa Times-Age THURSDAY, OCTOBER 6, 1938. PENALTIES ON ENTERPRISE.

♦ THAT cheerful optimist, the Prime Minister, is tone! of telling' his audiences that though the people of. this country are paying £11,000,000 more per annum in taxation than they were two years ago, they are very much better off than they were at that earlier period. At Invercargill on Tuesday evening, for example, Mr Savage said, as he is reported, that: — Since March, 1936, there had been an increase by £11,000,000 in taxation, but since then the national income had increased by £45,000,000, leaving the taxpayer with a credit of £34,000,000. There had been slight increases in the income tax rate and in the graduated land tax, but nothing like the increase shown by the figure he had quoted. These comfortable generalities will not satisfy people who accept and act upon the advice they are being tendered freely at present to think for themselves. Some instructive particulars of the. actual effects of the high taxation which Mr Savage and his colleagues . regal'd so lightly were given at the annual meeting of the W.F.C.A., Ltd., on Tuesday. After working through years of difficulty and depression, the company has strengthened its position considerably, but its shareholders have not received any dividends since 1925. Nevertheless it is called upon, under the legislation of the present Government, to pay upwards of £1,400 in graduated land tax, as well as increased income taxation, including the “bombshell” tax of Is in the pound imposed at the end of last session. It is noteworthy that the average holding of combined nominal capital in the company (ordinary and preference shares) is only about £66. Like others of its kind which - are rendering good service to the community, the company, with its 300 employees, might, be thought worthy of encouragement rather than of being subjected to what can only be regarded as penal taxation. • In specific examples of this kind, the fact is brought out clearly that the all-important end and aim of the Government’s taxation policy is simply to gather in as much revenue as possible and that in this process the effects of high taxation on commercial and industrial enterprise are largely disregarded. • Where companies generally are concerned, the effect of the existing methods and rates of taxation, plainly is Io impose at least an undesirable handicap, if not a crippling burden, on economic enterprises of a thoroughly desirable and advantageous kind. As far as possible companies are bound to pass on the taxation in increased charges to the public. Companies that cannot do this are in some apparent danger of being taxed out of existence. Many industrial and commercial companies in this country are owned by groups of shareholders whose individual holdings are of modest amount. In the extent to which this does not apply, all equitable demands might be satisfied by taxing individual incomes. In many branches of productive industry and distribution, organisation on a comparatively large scale has become essential to efficient and economical service. Why, then, should enterprise on these lines he penalised as it is being penalised in New Zealand today?. The graduated land tax is a'particularly unjust impost as it bears on a. company which is organised to carry on business in a number of branches and therefore is under the necessity of owning or occupying a number of more or less valuable sites. Designed for bursting-up purposes, to enforce the subdivision of large landed estates, the graduated tax is definitely and deliberately penal in its effect. The rate of the tax increases in proportion to the value of land held, irrespective of the uses to which the land is put. Such a tax surely should not be imposed on land that is being used effectively, with advantage to the community. If the existence of trading and other companies operating through a number of branches is justified, the imposition of graduated land taxation on these companies cannot well be justified. Before the present Governinent took office, the taxation of companies in this country was open to serious criticism as being an unjust burden on legitimate enterprise and opposed to the interests of the community. Under Labour rule, however, this burden lias been made heavier, and its injustice has been accentuated. Even in the best of limes, the penal taxation of companies must militate against the expansion of productive enterprise and therefore against the extension of employment and the establishment of higher standards of service to the community.