TAXATION BILL.

Press, Volume LVI, Issue 16947, 23 September 1920, Page 6

TAXATION BILL.

MUNICIPAL TRADING CONCERNS. GOVERNMENT'S PROPOSALS STRONGLY OPPOSED. (press association telegram.) WELLINGTON, September 22. Strong opposition to the Government's proposal to tax municipal trading concerns was expressed at a meeting of the executive of the Municipal Association, held in the Parliamentary i Buildings T his afternoon. Mr J. P. j Luke, M-P. (Mayor of Wellington) prosided, and there were also present: — Dr. Thai'leer, M P. (Mayor of Christchurch). Messrs W. Begg (Mayor of (Thinedin). E. P. Rishworth (Mayor of Lower Hutu. J. A. Nash, M.P. (Mayor of Palnicr.ston North), T. Iv. Sidey, M.P. (Dunedin), R. A. Wright, M.P. (M'cliir.gtoii), and T. F. Martin (solicitor to the New Zealand Municipal Association'). Mr Luke .said that clause 23 of tho Land and Income Tax Amendment Dill was a nrovision which brought municipal trading conccrns into line with private companies, so far as taxation was concerncu. tie. ccuicnued that municipalities should not nave to prv taxes on their trading (.orceins, became such services were run so»eiy m the mieie.-its of the people. No special privileges were coiuerred upon anyoouy M i*>p<;ct to t'leic concerns, and tiie ie.sponsiunities of the local bouies were tnat tney should give the services at a minimum cost. Not one eft the municipalities was out for profit, and what pro his were made from its services would go back into the undertakings for the purpose of effecting improvements. Ii the municipal authorities were he taxed simply because their concerns competed with those of private companies, then, he said most, emphatically that thero would be very little encouragement to local bodies to establish trading services at all. If it were right to tax tramway, electric light, w:«.ler, or milk supply undertakings, then clearly it was proper to tax the post oflicc and tho railw-iys as well ("Hear, hear.") He believed that strong representations should be made to tho Government on behalf of the municipalities, pointing out that the proposed legislation was a very retrograde step. Such taxation would be burdensome, and would have tho effect of raising the charges on the noople. It was most important that "they should be very solid in their ooposition to the Bill. To his mind there was a difference between a municipal electric light concern and a private 'gns company. 'Mr Nasli: One is making profit for 'the few. Mr Luke: "Exactly." The two services were rliflVrent. As a medium for providing li<rht, gap was a vanishing clement.■ It was being superseded by electric lirrht, but for cook in rr and henting the use of gas was incrensintr. The present was the most inripnortun« time —if it wn.s ever opportune at nil —for brinrring down sneli taxation proposals. He know that the Government _ must have money, but he did think it rirht that such should he raised by tn"xinq the trading or industrial concerns of local authorities. Mr Luke moved: — '•'That mombers of tho executive wait on the Prime Minister, and stress that the proposal to tax local bodies' debentures and undertakings is inimical to the best interests of the people of the Dominion, and respectfully urge the Government to delete the proposals from the Bill." Mr -Martin said the effect of the Bill ■ was to place the debentures of local bodies on the same footing as the debentures of companies, and a tax of 3s in the £ was to bo paid on them. The Government would collect _ tho tax direct from tho local body, which would deduct the amount of tho tax when it paid the coupons. The debenture tax was to bo pa.fd on coupons honoured in London. Mr Massey had stated that that was not intended, but as ho (Mr Martin) read tho Bill, that was the effect. The proposal to tax debentures | placed a hardsliip on small iiivestors, because a, large number of debentures were taken up by people with small means. Mr Begg remarked that the Bill was likely to hit Dunedin pretty hard. Tho municipality thero was not in open competition with anyone in its trading concerns, and the residents were being sup- ! plied with services more cheaply than in any other part of the Dominion. Based on last year' 9 figures, the income tax that the Dunedin City Council would havo to pay, exclusive of the renewal fund and depreciation, would be something like £21,000. It was quite right that private companies engaged in similar services should have to pflv such a tax, but, under present conditions, tho ratepayers and the general public wore getting the whole of that money back. ''We won't oppose tho tax if the Government will let us tax all their property," added Mr Begg. rte maintained i that tho Government Departments wero not entering into fair competition with Ideal bodies. The Ihir.edin City Council tried to get some hydro-electrical machinery imported free of duty, but without success. Regarding the suggested payment of income tax on debentures, Mr Bcgg said that his Council had been negotiating for a renewal of £100,000 at 5} per cont., but the effect of the proposed tax would bo that the Council would have to pay 6i per cent. Dr. Thacker said that the Government should be compelled to pay rates on its denartmental buildings. Mr Rislnvorth said tho proposals of the Government simply meant that the finance of local bodies would be crippled. The rate of interest would become so high that anything in the way of development work would bo hampered. At present local bodies were hampered by tho fact that all Government property was exempt from taxation. If the Bill wei;e passed as it stood, local authorities would experience serious difficulties in. raising losrs. as the rate of interest 'would bo affected. , . j Mr Luke stated that the Mayor or 'Auckland was unable to attend the ! meeting, but he had indicated that ho i and his Council were entirely opposed Ito the proposals in tho Bill. The Mayor lof Auckland had expressed the viow ■ that, if the Government persisted in its proposals to tax the.profitsof the trading departments of local bodies, it l should make it clear that only such ; profits and not income .from general rates or water cthargca should be tax"a. Mr Luke's motion was carried, and it was arranged that the executive should place its views before tho Prime Ministor to-morrow morning.

TAXING CO-OPERATIVE COMPANIES.

APPROVED BY FARMERS' UNION

The executive of the Auckland provincial district of the Now Zealand Farmers' Union forwarded to yesteraav's meeting of the North Canterbury district executive a copy of a resolution recently passed, in which the Auckland oxecutive, "viewed with extreme concern*' the proposals in the Land and Income Tax Amendment Bill, now before Parliament, in which it was proposed to tax co-operative companies up to 8s 9d in the £ on net profits. The motion urged upon tho Minister of Finance the exemption of purely co-operative companies from the operation of the Bill, as sucn companies were conducted solely in the interests of small shareholders by returning all profits to their members, lifter paying overhead charges and a terta.in minimum fixed rate of interest

on share capital, and were in no sense capitalistic or income-earning concerns. The support of the Canterbury Union in making the protest was sought, but was not forthcoming. The chairman, Mr W. A. Banks, said that the Government must have money, and, personally, ho did not see why cooperative companies should have any more consideration than anyone else.

Mr I>. Bates f-aiel that the co-opera-tive companies had the remedy in their cwn hands. They could so reduce the prices to the consumers as not to show

profit* Mr Banks remarked that there was n groat. deal in Mr Bates's contention. If tin* companies chnrgeel less to the consumer, their profit? would be less, while all would he securing an advantage. He was not in favour of supno run: t Auckland's view of the matter.

Another sneaker remarked that if cooperative concorns were making large profits, thev were not legitimate cooperative companies at all. Eventually on the motion of _Mr R. Evans it was decided that, in the opinion of the meeting, there should he n r> exemption for any trading concern whatever.