LOCAL LOANS.

Press, Volume LVI, Issue 16963, 12 October 1920, Page 6

LOCAL LOANS.

DEBENTURE TAX OBJECTED TO

The City Council last night enterod a strong protest against the proposal to impose a 2s 6d tax on local body debentures, such tax to be collected by the local authorities.

The Auckland City Council forwarded a report and a protest on. tlio matter of the taxing of debentures of local bodies.

Cr. J. A. Flesher moved: "That this Council strongly protests against the proposal of the Govenment to compej local bodies to collect an income-tax of 2s 6d in the £1 on debentures issued by local bodies, being of opinion that such provision would prevent local bodies from raising loans on favourable terms.'' Cr. Fleslier said the Council could not protest too strongly against the proposal. The proposal would work a great injustice to local bodies, and the most that could be said for it was that it provided the Government with an easy method of collecting revenue. It was time the Department adopted somo scientific and equitable method of taxation. In order to reach the big man the . small people were to be penalised under the proposal. The Mayor sai'd he gathered that tne duty of the local authorities would be to indicate whero the debentures went.

Mr Ilesher contended that the tax should bo levied on income, and not on debentures. Cr. J. W. Beanland, who seconded the motion, said that if the tax were imposed, the local bodies would be unable to raise loan money. Cr. H. T. Armstrong said the position was that the Government were up against it, and were shifting the hurdlo on to tlie local authorities.

The Mayor: We mustn't hav© politics.

Cr. Armstrong said the proposal would nlay into the hands of the moneyed classes, and probably was intended for that purpose. Cr. F. R. Cooko said the whole thing was a falling out among tho moneyed people, and he would have nothing to do with it.

Tho motion was carried, and it was decided to forward copies to the Primo Minister and local members of Parliament.

A DISC OUR AGIN G OUTLOOK. POSITION OF CITY COUNCIL. In view of the discouraging position regarding the raising of local loans, the Finance Committee recommended the City Council last night not to incur any loan expenditure, or liabilities on loan account, unless the money was actually in hand. The committee stated that tho following works were authorised and in hand: — Amount still l-e Amount. Interest, bo raised. £ Per cent. £ Sanitary conveniences .. 2,651 6i 1,000 Collection' and disposal of nigktsoil at CJianeys .. C,OOO 5j 6,000 The following loans aro partia:lly raised:— North Kichmond \VaterworJt3 .. 6,200 8 4,800 Electricity distribution .. 150,000 Z i 101,000 Municipal Buildings, Manchester street .. 16,000 Si 8,800 Li n wood Public Works Loan .. 7,500 5J 7,500 Total .. £129,100 In addition to the foregoing, a poll was to bo taken on the 20th instant on a proposal to raise a loan of £17,000 at 5i per cent, for water supply for North Linwocd and . Avonsido special rating area. The committee understood that the Auckland Tramway Company was offering Auckland City Council 5} per cent, debentures, issued in payment for the purchase of the tramway undertaking at- £90 10s. Then there was the intention of the Government to levy 2s Gd in tho pound incomo tax on debentures, which would rcducc the rate of interest on oi per ccnt. debentures to £4 lGs 3d per cent. To this reduced rato of interest must be added the ordinary income tax that the holder would otherwise have paid, and which was unknown nnd would vary according to the financial position of tho holder. Under these circumstances the committee did not see the slightest chance of the Council raising any more money at oi- per cent. A 54 per cent. £100 debenture, subject to 2s 6d in tho pound income tax, -was only worth about £37 20s.