"UNJUST BURDEN."

Auckland Star, Volume LXVII, Issue 226, 23 September 1936, Page 4

"UNJUST BURDEN."

COMPANY TAXATION.

LARGE FIRMS' HANDICAP.

7/6 IN THE £

Claims that an injustice was being done to companies and shareholders by recent revision of taxation, were made by speakers a.t the annual meeting of the Kaiapoi Woollen Manufacturing Company, Ltd. , , , "I feel it is my duty to make some reference to the increased burden joint stock companies are now asked to carry from the point of view of taxation," said Mr. McKellar, chairman of directors. Before this year the company was required to pay 4/6 in the £, plus 30 per cent, which was equivalent to about 5/10 in the £. This has always been regarded as a very stiff imposition . . . therefore tiie recent announcement that income tax on the basis we are called upon to pay has been increased to the substantial figure of 7/6, is a tremendous additional load which the company will be called upon to carry in the future; and when land tax is added to this it seems a most unjust burden considering that most shareholders are on a much lower rate of taxation than the rate the company is called upon to pay. "This matter of company taxation could be fairly met by imposing a flat nominal tax on companies which would not be such a drain 011 capital. After that shareholders would pay any balance on income tax required by the State in their individual assessments."

Mr. W. H. Clark contended that the increase would be a big handicap to the larger companies in the Dominion because before they could make any reasonable percentage return for shareholders the amount would be such as to qualify for the 7/6 in the £ income tax. This would be an injustice to the average shareholder. "I am also advised," said Mr. Clark, "that it is estimated that the increased wages bill to the company this year will be between £20,000 and £25,000. This will mean that considerably more bus ness will require to be done to meet this heavyadditional charge 011 our industry, and with live hours in the mills and four hours in the factory taken off each working week, shareholders must realise that the company is now very heavily handicapped indeed, particularly when we have to compete with overseas productions on the same basis as we were called upon to do before these recent measures were introduced.

"However, shareholders have the assurance that their directors will do their very best to meet the position, and all matters will be carefully watched. Business lias been steadily improving with the company for several years, and if this improvement is maintained during . the present year it will be a help."