UNFAIR COMPETITION.

Auckland Star, Volume LV, Issue 115, 16 May 1924, Page 4

UNFAIR COMPETITION.

STATE AND MUNICIPAL, j FREEDOM FROM TAX. '. i EVIDENCE BEFORE TAXATION 1 COMMISSION. ißy Tele_raph.—Special to "Star.") | WELLINGTON, this day. ■ | In his evidence before the Taxation Commission to-day. Mr. Gerald FiUgerald dealt particularly with the unfair competition of municipal and State trading enterprises with private concerns of the same character. He said: i "It is alleged by private trading concerns that it is unnecessary and unfair to allow municipalities to trade in com- ' petition with them, and it is alleged j that tbe further special unfairness- ii i seen in the freedom from tax enjoyed by the municipalities. This grievance ' , has lately tended to become more acute, as the activities of municipalities have extended beyond the usual public utilities and invaded the region of direct trade. Thus, the Christchurch City Council ia tho exclusive agent for a certain motor vehicle that is being sold in competition with others, and the elec- | trical department there, and also in ! other cases, undertakes the supply of : electrical fittings and machines in comi petition with private traders. Municii palitics, of course, are not called upon :to pa- rates, nor usually rent upon any ;of their premises, which is an initial advantage of great consequence, and the ! i freedom from income tax and land tax jis such an further advantage as to mak_ ' the complaint of a private trader in competition with such immunities a ; grievance of the first importance. Moreover, the loss to the State in not exacting from these illegitimate trading adventures is so gTeat as to merit the closest scrutiny. It has' been stated that municipalities, if assessed for income tax, would so frame their profit and loss accounts as to show little or no income, and so evade assessment. This possibility is admitted; but it is also plain that such evasions could easily be met by a special method of assessment under which no escape would be possible. A special form of assessment . would, in any event, be required if the • ! company tax were abolished in favour 1I of an individual tax; and in such event ■ municipalities would probably have to 'be regarded as individuals, sin-je they have no distributable profits as in j the case of companies, and ara (direct recipients of the income ' accruing from the result of their acthi« ties. j State Trading. | "Statements are now being published that one country after another is abandoning State trading as fast as ' possible, -and frank recantations of suci heresies are being bracketed with ad- • missions that trading adventures are | most successful and most useful to the I public when they are left in private hands- The essential vice of all State trading seems to he the fallacious ; doctrine that profits may ba disregarded in favour of a service giving certain, conveniences to ths public, and in. pursuit of this entirely unsound prin. ' ciple the safeguards usually required ia J tbe establishment of sound business are ; I seldom erected. This "method of coni ducting a business sooner or later results •I in losses that have to be passed on to 1 j the taxpayers—an wholly unjustifiable, proceeding. For many years l it. was contended that State trading should not be subject to taxation, but the palpable injustice of competition with private traders upon such terms gradually forced itself upon the public notice, and now the principle that State trading should be taxed upon the same terms as private undertakings is generally Ter cognised, and in most of our State trading departments, income tax is now • | payable. There are still some exceptions which jt is submitted should bs . eliminated if the system of State trading is to be maintained. The State, however, still refuses to pay local body rates even in cases where it has compulsorily acquired large blocks of land for housing purposes, upon which rates were paid by the previous owners. It is submitted" that this manifest injustice should receive consideration. There is another very important fact connected - with the payment of taxation by the State trading departments in that tha amount of bucli tax, when paid by tha State concern, is very much less than the amount that would be assessed to the private and the loss of revenue is considerable."