HEAVY BURDEN.

Auckland Star, Volume LXX, Issue 30, 6 February 1939, Page 11

HEAVY BURDEN.

TAX ON INDUSTRY. GAS COMPANY SUFFERS. SOCIAL SECURITY IMPOST. "In no other part of the British Empire are gas companies taxed so highly as In New Zealand." This was the statement made by Mr. W. R. Wilson, chairman of directors of the Auckland Gas Company, at to-day's annual meeting of shareholders.

"Income tax," he added, "falls heavily on the company because of our large share capital. Had the proportion of share capital been less and the proportion of debenture loan been greater, the amount payable in income tax by the company would have been correspondingly reduced.

"In Great Britain the tax is paid only on profits carried forward and not disbursed as dividends to shareholders, and it amounted on the average in 1937 to .63d per 1000 cubic feet of gas sold. In 1938 a large Australian gas company paid in taxation I.Bld per 1000 cubic feet sold, and another paid 1.4 d per 1000 cubic feet, and in Auckland we paid 9.83 d per 1000 cubic feet sold. The total amount paid in income tax by this company for the past 10 years has been £280,036.

Unwarranted Inequality.

"The new tax to be levied for social security will further increase the amount payable in taxation should we be unsuccessful in receiving the exemp-

tion for which we have made application. Being in competition with public services which are not required to pay this tax, we consider it an unwarranted inequality in competitive trading, creating injustice and hardship to our shareholders.

"The proceeds of the tax, if it i 6 imposed, will be used in part to provide social security for the employees of competing services, and these competing services, enjoying as they do exemption from income tax and other privileges, are far more able to pay than we are."

Referring to the accounts the chairman explained that an alteration had been made in the manner in which they had been previously set out. The income tax, £36,961, was shown in the profit and loss account, instead of in the working account as formerly. The working account, however, still contained local rates and land taxes, £9140, which might be considered to be working expenses. Income tax was payable out of the profits earned, and was therefore properly shown in the profit and loss account along with the dividends paid during the year. Increase in Turnover. Total receipts from the sale of gas and residuals, together with the balances of the various accounts, amounted to £439,941, which was approximately £8000 more than in the preceding years. On the other side of the working account, however, expenses including land tax, rates and depreciation, amounted to £341,372. The profit for the year, after writing off the full amount allowed by the Income Tax Department for depreciation, was I £98,509. From this sum, after payment of income tax, it was proposed to transfer £5000 to income tax reserve, bringing that reserve up to £75,000.

From the amount remaining a final dividend of 2i per cent, making the total dividend for the year 5 per cent, cu Mcommended, the baiaac* ol ,£359

to be carried forward, making a total of £10,838 at the credit of the profit and loss account.

Higher Production Costs. "The chief causes of a further increase of production costs during the year had been the awards which came into force giving increased wages and other benefits to employees, and these had increased expenditure by £9454.

"The total wages bill had risen from £126,597 in 1935 to £168,395 in 1938, an increase of £41,798, or 33 per cent, but the number of employees had only been increased from 637 to 660, an increase of 3.7 per cent.

"During the. year gas service pipes had been connected to the premises of 655 additional consumers, bringing the total number to 52,953. Over four miles of new mains had been laid, making the total 707 miles. The gales of gas exceeded those of the previous year by over 9,000,000 cubic feet.

A New Agency.

"The company had acquired the agency for gas-operated refrigerators within its area of supply. They had also acquired an agency for bottled gas.

"Towards the end of the year," continued Mr. Wilson, "we had to make application for many licenses to import materials necessary for our operations, and in particular, for the importation of coal from Australia. This company has always used a large proportion of Newcastle coal for gas-making, but not to the exclusion of New Zealand coals. On the contrary, it has always studied to use as much New Zealand coal as possible and has installed plant with that object. The result of experience is that the best results are obtained by using a fifty-fifty mixture of coals j from boith sources.

"As a result of the Australian coal strike last September, our stocks of coal have become depleted and we have not been able to build them up again, as we could not obtain sufficient supplies from New Zealand mines to enable us to do so. It is therefore very necessary that we should be permitted to import as much Australian coal as has been our custom in the past, in order that we may be in a safe position with regard to our coal stocks."

Concluding, Mr. Wilson eulogised the work of the general manager, and of the whole of the company's staff, which had given excellent service in what had been a trying year. He also made reference to the death of Mr. L. T. Rapson, the late cashier, who, he said, had given a life service to the company, having been in its employ for 52 years.

The report was unanimously adopted.

The retiring directors, Messrs. E. R. IST. Russell and J. A. Peacocke, were reelected directors, and Messrs. F. C. Buddie and N. A. Duthie were reappointed auditors.

A vote of thanks to the directors and the management was carried unanimously.