8.—5.

62

[R. FINCH.

Mr. Hunt (to witness).] Do you believe in the system of graduated tax ? —Within limits, yes. I think that the graduations are too high. They go up too high. I think that the present heavy tax on commerce is too heavy in the interests of the community. Why do you believe in a system of graduateel tax ? Do you think that a man with a large income should pay more on each pound than a man with a small income ?—Of course, it is open to question, but it seems to me to be a universal practice. It seems to have been recognized universally as the fairer way of getting revenue for the State. The graduations apply as regards both land and income tax. It seems to be recognized as a universal custom. I take it you agree that a man with a large income—say, £5,000 or £10,000 a year - should pay a larger proportion of each pound than a man with a small income ?—Yes. With respect to these company incomes, the companies are owned by individuals, are they not ? —Yes, but it is the company that earns the income and not the individuals. But are not the companies owned by individuals ? —Ultimately, yes. And those individuals are large shareholders and small shareholelers ?—Yes. Can you show me any eiifference in the graduation in the amount of tax paid on each pound between the large shareholder and the small shareholder ?- -I think you are: getting away from the question, which is that a company is a separate entity. It is a new being. It is practically a person, from a legal point of view and from all points of view. It can hold land as an indivieiual, and as an individual it makes profits. Is not the State, governed, for the benefit of its people ? —Yes. And is not the whole, of the State governed and controlled in the interests of the people themselves ? —Yes. The graeluatoel system was brought into being, was it not, because it was thought that the man with the large income could afford to pay more in the pounei than the, man with the small income ? —Yes. Is there any difference in the sacrifice made for State purposes by the large shareholder and the small one ?—I do not think that that argument I want to know. Is there any difference in the sacrifice, made for State purposes by the large shareholder and the small shareholder ? —I do not quite follow your question. Supposing you are drawing £10,000 a year from company shares and lam drawing £10. Are, you sacrificing a larger proportion of each pound for State purposes than lam ? It depends to some extent on how 1 acquired my holding. You have an income this year of £10,000 drawn from companies. I have; an income of £10 drawn from companies. Are you sacrificing any more of each pound of income than lam ? —I do not think that that question can be answered elefinitely Yes or No, for this reason : that you must take into account how the investment arose —how you bought the shares or how you came: to invest your money. The point is that you pay income-tax each year on your income regardless of how you acquireel the income. You have an income of £10,000 from shares in companies. I have an income of £10. Is there any difference in the rate per pound that we pay on our income ? —The tax is paid by the company itself. But the company is owned, by the individuals ? -Yes ; but the company is for all purposes, both theoretical and legal, a separate person. The State is run not for its institutions, but for its people. The institutions are for the people, not the people for the institutions ? —Yes. The company is owned by people —by large shareholders and small shareholders. Is there any eiifference in the sacrifice that the large shareholder makes as compared with the small shareholder ? — I do not altogether follow your question. The Chairman.] They pay the same rate of income-tax whether the income is large or small ? —Yes. Mr. Hunt.] If you are drawing a large income from interest on mortgages and I am drawing a small one, you pay a larger amount ?—Yes. But if our incomes are drawn from companies we both pay at the same rate ? —Yes. In this 1920-21 return to which you referred, approximately 68 per cent, of the total tax collected came from companies ? —Yes. So that there was no graduation in the tax paid by the individuals as far as that 68 per cent, was concerned : they all paid the tax at the same proportion ? —Were they all taxed at the maximum rate ? That made no difference between the small and the large shareholders. So that of the total tax paiel in that year 68 per cent, came from companies. Those companies were all owned by wealthy individuals and individuals with small means. There was no spread in the tax as between the large, and the small shareholders ? —You are, ignoring the fact that a company is an individual. The State is not run for companies, but for individuals. You admitted that there was no difference; be:tween the rate of tax as between the large and the small, shareholders ? —Probably ; but if you had shares in a company which paid a small profit you would pay a lower amount than a man who hael shares in a company which made a large profit. But it is not a question between a company making a small profit and one making a large profit : a e;ompany may be owned by small and large people, but they all pay the same rate ?—But the individual did not earn the profit; it is the company that earned the profit. The incomes were earned by individuals, and those indivieiuals had no spread in the tax, as between them ? —I think that is too sweeping a statement. Can you show me any spread in the tax in any of those companies, as between the wealthy and the poor man ? —lf a wealthy man had shares in a company which made a small profit and a poor man had shares in a company which made a large profit, then you would have an inequality ; so that you cannot have the sweeping statement that they both pay the same rate. Some shareholders are big wealthy men and some are small poor men. There are as many large men in small companies as there are in big companies. Can you show me any difference in the rates of tax men would pay because of their large or small holdings ? —No, there is no difference.