Sharp Criticism Of New Excess Retention Tax

Press, Volume XCVII, Issue 28629, 4 July 1958, Page 13

Sharp Criticism Of New Excess Retention Tax

(New Zealand Press Association)

AUCKLAND, July 3. I The Government should be| asked to hold up legislation on I company taxation until all angles!

of it have been fully considered by everyone concerned. Sir John Allum told the council of the Auckland Chamber of Commerce

today. Several members severely criticised the Government’s intention as containing no incentive to the business community and endangering full employment.

The excess retention tax on some of the profits retained in companies for further development came under heavy fire. Sir John Allum thought that company profits should not be taxed in the hands of the companies but in the hands of the receivers of dividends.

The chairman (Mr J. W. Hyland) said the greatest harm was likely to be done in the numerous field of moderately-sized private companies. In most of these, the main shareholder or shareholders drew moderate remunerations for their services and ploughed back virtually all profits If a second tax were to be put on this accumulation, the management would draw more freely, relax its efforts and deliberately restrict the size of the concern to the detriment of what should be An expanding economy. The excess retention tax hit •at the provident company, said Mr

I Hyland. Funds, already taxed, I were retained to finance develop- ; ment, augment the inadequate de- ' preciation allowances for replac- | ing plant and equipment and to 1 weather recessions, thus ensuiing continuity of employment. Grave hardship would be suffered if the legislation as proposed was passed. Mr Hyland said. Companies did not accumulate funds merely for the sake of accumulating them.