TAXATION BILL.

Press, Volume LVI, Issue 16959, 7 October 1920, Page 7

TAXATION BILL.

TREATMENT OF LOCAL BODY DEBENTURES. MAYOK OF AUCKLAND'S CRITICISM. (srECIAI. TO "TTIE PRISS.") AUCKLAND, October 6. The amendments brought down in the Houso of Representatives last night rej specting the proposal in the Land and , Income Tax Amendment Bill to tax j ; local body debonture?, were the subject j of some trenchant criticism this morn- ; . ing by the Mayor (Mr J. H. Gunson), j j who expressed the decided opinion that j : tho Prime assurance that j local bodies would have no need for concorn when the amendments appeared was not borne out. "It appears quite , . clear now," Mr Gunson remarked, "that J : the Government proposes a 2s 6d tax upon local body debentures. This makes 'no material alteration to the proposal j about which the Auckland City Council ! and practically the whole of the local ! bodies in the Auckland district have ' protested to the Government. It means : that, in respect of past issues, the 4 >per cent, debentures will produce now j to the lender £3 10s, and the 5 per cent, debentures will produce only £4 7s 6d. Where people have bought these . debentures on what they felt wore secure terms as a safe investment at a low rate of interest, the corporation is ' ' now to bo compelled by statute to break ' its contract with the debenture-holders 1 by deducting a certain amount as repre--1 sented by tho proposed tax. _ This, in my opinion, inflicts an injustice upon purchasers of debentures hi the past, and if the tax is to be enforced, it should certainly not bo made retrospective, as it appears to me to bo open to very grave objections, and is calculated to damage the financial reputations of local bodies in the Dominion. A contract" is a contract, and should bo adhered to. We have contracted to pay these certain rates of interest, and are now going to bo arevented from doing so. As to rhe future, thq' position from the local bodies' standpoint is going to be a very serious one indeed. _ Local bodies- by this proposed legislation will ba brought at once, so far as ther finances are concerned, into the samo class as trading concerns. The suggested remission to the small taxpayer will be found to bo no concession at all. and no assistance to local bodies. Tho damage will be done by the Act in its operation, unless the Bill is amendod. Tho nntnbw of small taxpayers likely to apply for a refund by means of personal applications to the Commissioner of Taxes will be small indeed, besides which, the principle of levying a tax to be refunded is an iinsound one."