UNFAIR COMPETITION.

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

UNFAIR COMPETITION.

STATE AND MUNICIPAL j FREEDOM FROM TAX. j 111 EVIDENCE BEFORE TAXATION , COMMISSION. (By Tele?raph.—Special to "Star.") WELLINGTON, this • ■ In liis evidence before the Taxation Commission to-day, Mr. Gerald Fit*.. Gerald dealt particularly with the unfair competition of municipal and State trading enterprises with private concerns of the eanw character. Hn gaidi j : "It is alleged by private trading con» 'cerns tliat it is unnecessary and unfair to allow municipalities to trade in comI petition wilh them, and it ia alleged : that tbo further special unfairness- jg i seen in the freedom from tax enjoyed by the municipalities. This grievance ' ! has lately tended to become more aciitei as the activities of municipalities have extended beyond the usual public utUities and invaded the region of direct trade. Thus, the Christchurch CityCouncil ia the exclusive agent for a cer-' , tain motor vehicle that is being sold hi , competition with others, and the elecI trical department there, and also in ! other cases, undertakes the supply of : electrical fittings and machines in comj petition with private traders. Municii palities, of course, are not called upon :to pay rates, nor usually rent upon any jof their premises, which is an initial ■ ; advantage of great consequence, and the i freedom from income tax and land tax jis Buch an further advantage as to make ! the complaint of a private trader in competition with such immunities a ; grievance of the first importance. Sforeover, the loss to the State , in not exacting tax from these illegitimate trading adventures is so great as to merit the closest scrutiny. It has' been stated that municipalities, if assessed for income tax, would se frame their profit and loss accounts as to show little or no incejne. and so evade assessment.. This possibility is admitted; but it is alw 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 of an individual tax; and in such event J municipalities would probably have te be regarded as individuals, since they have no distributable profits as '.in' J the case of companies, and are direct recipients of the JHcem* accruing from the result of their activi. ties. State Trading. "Pbataments are now being publi»be4 that one country after another ii abandoning State trading as fast v possible, and frank recantations of gijci j heresies are being bracketed with adI missions that "trading adventures-are. J most successful and most useful to. tie' ' public when they are- left in private ; hands- The essential vice of all State' trading seems to be the fajlaqoo* [ doctrine that profits may ba disregarded in favour of a service giving: oertaiaY conveniences to the public, and in pursuit of this entirely unsound principle the safeguards usually required in the establishment of sound business are seldom erected. Thie method of co* ducting a business sooner or later r«julti •I in losses that have to be passed on to j the taxpayers—an -wholly unjustifiabk. proceeding. . For many years )it,.wi". .contended that State trading shatijinok be subject to taxation, but the palja&e injustice of competition with private traders upon such, terms gradually forced itself upon the public notice, .a\)d now the principle that State tradiai E.-heuld be taxed upon the same termi ai private undertakings ie generally cognised, and in moet of our Stat* trading departments, income tax is now .| payable. There are still some esoeV. ' tions which jt is submitted ejioulil bs ! eliminated if the syrtem of gtate tradioj is to be maintained. Tbe State, however, still refuses to pay local W-7: rates even in cases where it has «nnpulsorily acquired large blocks of lini for housing purposes, upon which wtes were paid by the previous owners, jt is submitted" that this manifest injustice should receive consideration. There another very important fact connected'•with the'payment of taxation by the State trading departments in that the amount of such tax, when paid by ths State concern, is very much less than the amount that would be assessed to the private and the loss of. Tevenne, is considerable."