INCENTIVE BUDGET DESIRED

Ashburton Guardian, Volume 66, Issue 250, 3 August 1946, Page 2

INCENTIVE BUDGET DESIRED

MANUFACTURERS’ VIEWS DETAILED REPEAL OF EXCESS PROFITS TAX (P.A.) WELLINGTON, August 2. Because of the need to increase production, everything should be done this year to present an “incentive Budget,” states the New Zealand Manufacturers’ Federation in a memorandum presented primarily to the Minister of Finance (the Rt. Hon. W. Nash) and also to the Prime Minister the Rt. Hon. P. Fraser) and the Minister of Industries and Commerce (the Hon. D. G. Sullivan).

The Federation asks for repeal of the Excess Profits Tax Act, 1940, and for special taxation provision more adequately to cover depreciation of plant, machinery, buildings, leasehold assets and staff amenities. The adoption in company taxation of a step system similar to that at present applied to the incomes of private individuals is also suggested. These defects' in existing taxation could be j remedied immediately, the manufac- j turers state, but while they exist they j contrive to “obstruct and prevent increased production in the era of postwar shortages.” In its case for the repeal of the Excess Profits Tax Act, the Federation points out that the war has been over almost a year, and that the Act was a war-time measure to prevent excessive j profit-making from war-time circum-j stances. *“lt is most inappropriate to present conditions that this measure, with its restrictive effect on industry’s return to normal conditions, should remain on the Statute Book.” Obvious Case Mentioning that the existing special allowance for depreciation on plant, machinery and buildings applies only to assets acquired or installed in the period beginning March 31, 1945, and ending March 31, 1948, the Federation says there is an obvious case for extension of the period. “Members of the Federation are continually meeting with new instances of unavoidable delays to their plans for machinery and buildings. World-wide labour and raw material shortages and shipping delays make it reasonable to expect that the difficulty will increase. It is essential that some extension be made in the allowance period. Shortages of materials and other factors are also delaying rebuilding.' It **is suggested that the period of application be extended to March 31, 1950.” The Federation also asks for more flexibility in the beginning of the j allowance period (March 31, 1945). Leasehold Position Concern is expressed that the Government has not so far made provision for allowance to cover the writing-off of leasehold assets acquired by a taxpayer for the production of his assessable income. “Where money is expended on leasehold property solely to earn income and is actually lost by the taxpayer in earning such income, then the amount of true profit can be arrived at after allowance is made for the leasehold expenditure incurred. The process often involves the levying of taxation not on profits derived, buf on money laid out and lost in the production of assesable income,” the Federation contends. Stating that many manufacturers have incurred and will continue to incur heavy expense in providing staff amenities such as cafeterias and locker and‘first aid rooms, the Federation asks that these items be made subject to annual depreciation allowance. In ; Australia 33 1-3 per cent depreciation I is allowed, and the Federation claims i that the recent introduction of the •Factories Bill makes a similar allowiance of vital interest to New Zealand | manufacturers. Step System Wanted Strongly urging the substitution of the step system for the existing system of graduated taxation on companies, the Federation declares that in many cases the present method leaves only an infinitesimal amount of the extra income earned by an expanding company. “An expanding business, under the present taxation set-up, passes through a stage, when there is no appreciable benefit to the company from, the increasing business. The consequence is that at a time when the Government and the people are crying out for increased production, progress is retarded by the Government’s own financial legislation.’ The Federation strongly urges that the position be rectified by the adoption of the step system as applied to the incomes of private individuals. We would suggest that everything possible should be done this year to make an incentive' Budget ... If this is to be clone you cannot fail to grant these concessions.”