UNTAXED ENTERPRISES.

Auckland Star, Volume LVII, Issue 26, 1 February 1926, Page 8

UNTAXED ENTERPRISES.

AN UNJUST SYSTEM i GAS COMPANY CHAIRMAN'S CRITICISM. In moving the adoption of the accounts and annual statement of the Gas Company at the meeting of shareholders this morning, the chairman (Mr. J. H. Upton), dealt at some length with the subject of rates and taxes. He said: — "Included in taxes is an item of £24,372 for income tax and it is this which merits your serious attention. The income tax charge, necessary as it is, involves to us a gross injustice, owing to circumstances which I will relate. We are purveyors of light, heat and power. As you are aware we have a keen competitor in the Electric Power Board who also are purveyors of light, heat and power, but while this company pays an income tax of £24,372 the Power Board is exempted. All economists uphold the maxim that every industry should bear the cost of its administration, and if it cannot, it is being conducted at a loss. Taxes are a necessary part of the cost of administration, the Power Board pays no taxes, and, therefore, pro tanto, their business is conducted at a loss. Who pays that loss? None other than that overburdened victim the general

public, of which gas manufacturers form a part and gas consumers a very large part. Both services supply precisely the same commodities; the one is taxed to the tune of £24.372 a year, equivalent to 5d per 1000 cubic feet of gas sold, the other is exempted. But that is not all. Both the Power Board and ourselves require to import large quantities of manufactured material, but the Customs duties are so arranged that while the gTeater part of our importations of such material arc dutiable, those of the Power Board are almost wholly free. It seems incredible, but. unhappily, it is true.

'"The question may be asked, how can you assess for income a concern that does not show a profit? The answer is very simple. A company is taxed on its profits, that is. substantially its dividend. A Government or municipal concern has no shareholders' capital, but is carried on on borrowed capital: the interest it pays on such capital is the equivalent of shareholders' dividend and should be. taxed accordingly. The Power Board has borrowed £1.722."o00: the interest on that sum at oi per cent is £94,867 on which income tax ought to be paid: the amount would be about £21,345. But even that is not all: they add insult to injury, for when they borrow money your property is pledged as security for its repayment; they are now proposing to borrow a further £650.000. for which" of course, your property is pledged. The Associated Chambers of Commerce have given their verdict on this matter, declaring that: 'All State and public utility trading concerns which come into competition with private trading concerns on similar lines should come under the provisions of the Land and Income Tax Acts and be charged land and income tax to the same extent as private enterprises/ To this nothing can be added except to say that the Power Board exemptions are equivalent to a subvention of not less than £30.000. or, including the new issue, £40.000 a vearand that an industry that requires stimulant to such an extent suggests that thrre is a field for the the prohibitionist. "Oh. but. it is said, this Power Board is for the benefit of the whole people and thus renders universal service: Well that is simply not true: the board renders service only to those who use its product—who are not by any mean* the whole people—on the rest it is a °toss imposition. But has this eompanv rendered no service? How about the >tate of things 60 years ago when a few patriotic citizens formed it? Did they render no service? Why the Act under which they were incorporated gave them power to pay 20 per cent dividend, so nsky was it thought to be; it is a nroud record ot this company that it has never availed itself of its authority to pay even one-half of 20 per cent on the capital actually paid up by shareholder* Does anyone think that a great business can be carried on for any other reason than that it renders service? The dividend is incidental: the real ten i= r ;"! Ce ; «-. What •»?• the Rotarian motto: above self-He profits most who serves best.' That is t?ue of large successful business. ••Havmg said this much about compeution combined tvith unjust taxation you naturally ask ho* is it affecting our trade.' ..Well, in one sense, not at a?i we nave increased our output and we pay our dividend a 3 usual;- i n another t* the extent of that taxation it ' ents a eduction in the price of gas