Gold Production and Taxation

Press, Volume LXXIII, Issue 22252, 17 November 1937, Page 8

Gold Production and Taxation

The Minister for Mines, in the annual statement which he has just issued, reports and regrets a slight fall in the annual production of gold. It ■was, in fact, for 1936 only about 700 ounces under the previous year's total; and for five consecutive years the total has exceeded 160,000 ounces. Since the 1931 total did not reach 130,000 ounces, it is sufficiently clear that production has been very well maintained at a level which signifies a great and useful advance in activity. To some extent, not easy to measure, this advance has been a response to direct State assistance and encouragement; but there can be no doubt that the major influence has been the rise in the world price of gold, with the special (but diminishing) advantage in New Zealand of the so-called exchange " sub- " sidy." It may be surmised, not unsafely, that if full account is taken of this stimulus to goldmining, then the expenditure of the State, directly and indirectly applied to the same purpose, has not produced proportionate results. Yet while it has been the official policy to promote hopeful mining enterprise and stimulate gold production, and to do it by spending and lending as well as by administrative and material co-operation, the industry has at the same time been burdened by a special tax, the effect of which is discouraging and injurious. The tax remains, though the original excuse for levying it, weak enough to begin with, has entirely disappeared. The Government can very well do without the special export tax revenue of £ 108,793 6s 2d, and has failed on all occasions, when challenged or petitioned, to say one rational word in defence of the tax. The industry is singled out to bear it; yet, as the Government's own policy acknowledges, it is an industry which it is peculiarly desirable to aid and relieve. The tax falls, not on profit, but on production. That is, it is paid not only by established and profitable enterprises but by those in process of development, those in difficulties, those showing a bare margin of profit. It not only diminishes profit but slices away what may be a fine but sufficient margin of profit, sets further off the possibility of profit, and—most mischievous of all—increases losses. This is iniquitous taxation. But its iniquitousness is easier to understand than the puzzle of its being imposed, an obvious check to expansion, upon an industry whose interests the Government claims to favour and to further.