HIGH TAXATION

Waikato Times, Volume 127, Issue 29241, 11 October 1940, Page 7

HIGH TAXATION

OBJECTION VOICED NOT ALL FOR WAR RETARDING INDUSTRY “Some months back your directors lent £25,000 to the Government, free of interest for the duration of the war and for six months thereafter,” said Mr E. M. Edkins in his address to shareholders. “We are now compelled to convert this loan to the compulsory one, free of interest for three years and at the rate of 2\ per cent for ten years thereafter. If we did not convert, we should have to subscribe a further similar amount under the latter conditions. “It will interest you to note that the burden of finding the £8,000.000 required under the loan is placed upon the shoulders of 18.000 taxpayers and 3000 companies, and doubtless you will be told this is truly democratic. The withdrawal of this large sum from industry must of necessity retard the growth of business. “It is with diffidence that I make reference to taxation which, under the guise of war necessity, is being levied by the present administration,” he continued. “As will be seen from the balance sheet, from a net earning of approximately £69,000 the Government will take £43,000. “In other words, the Government, without any capital invested, without any risk of loss, and without any responsibility, take approximately 43s for every 26s left to the shareholders, whose capital and enterprise have made the earning possible.”

“Were all this necessary for war purposes, I doubt it any voice would be raised in protest, but when we consider that companies such as ours have to pay on their assessed profits 8s 9d in the £, plus 15 per cent for war purposes, plus Is in the £ for national security, and plus Is in the £ for social security—which in effect means 9s 9d in the £ for civil expenditure and 2s 33d in the £ for war purposes—l think we have the right to object,” added Mr Edkins. “It should be borne in mind that the constitution of a co-operative association such as ours is an aggregation of small interests, yet the small shareholder is taxed at the maximum graduated rate. “Taxation Restricts Enterprise” “May I bring before your notice the remarks of two eminent men, one an ex-President of the United States and the other a former Chancellor the the British Exchequer. The first, when criticising war taxation in America just after the last war, said:— “We must readjust our internal taxation to remove the burdens it imposes upon the will to create and produce, whether that will is the will of the big corporation or of the individual.” “The other, in a speech on the evils of excessive taxation, spoke as follows: “First, as to production, I think, the proposition is indisputable that heavy taxation restricts enterprise. A business cannot be developed without much toil and considerable risk of capital. The stimulus which urges men to venture upon new developments is in large measure the hope of additional profit. They will not risk their capital if, in the event of their labours proving successful, nearly the whole of the reward is to be taken from them. I do not say that this is necessarily so, but I do say that in the ordinary circumstances of human nature heavy taxation cripples enterprise. “Again, in a progressive undertaking a considerable part of the profits every year is kept in the business. The savings of one year become the capital in the next. Additional capital is essential to development, and there is no means of obtaining it except from the savings of the community. Heavy taxation which impounds these savings deprives our commerce and industry of an essential condition of growth.”