“BLATANT INJUSTICE” OF TAX ON DIVIDENDS

Press, Volume XCVII, Issue 28766, 11 December 1958, Page 23

“BLATANT INJUSTICE” OF TAX ON DIVIDENDS

(Nsw Zealand Press

AUCKLAND, December 10. The injustice of the tax on dividends was so blatant as hardly to need demonstration, said Mr A. M. Seaman, a prominent Auckland accountant, today. He was speaking St the annual meeting of Reid (New Zealand) Rubber Mills. Ltd., of which he is chairman. Mr Seaman said that as a matter of principle, It was hardly possible to condemn a tax on. dividends—that part of the proflt of of a company which came into the hands of the shareholders. It had been apparent for many years that retention of the system of .taxing company profits, directly aganist the companies and at high rates, was largely a matter of fiscal expediencey. It had, from small beginnings, assumed an importance and become a burden not originally contemplated. > To alter the system materially would be a major operation and ’to make adjustments that would place on each shareholder a liability for no more than his equitable share of the tax might result in a considerable loss of .taxation revenue. The plan imposed by the taxation statues of this year made no real attempt to adjust the equities. He said a dividend tax was the practice in other parts of the Commonwealth, but it was normally associated with a lower rate of taoc on the company itself. ; Mr Seaman said he was con- 1 ] cerned with the long-term effect of the change in taxation policy. Business development was largely dependent on company investment,Remove the reward for the’ risk the investor took and hq would

turn his attention to securities where capital risk Was avoided— Government and local body debentures. The result would be the starving of business enterprise and the encouraging of expenditure on public projects, of which many were merely pleasant amenities and a smaller proportion rank extravagances.

Mr Seaman said that under the present system of taxation, investors, most of whom were not wealthy people, were being made tokarry a jiurden which was too heavy and out of proportion to that levied on other sections of taxpayers. "The present taxation policy, more especially as it affects companies, is worse than one of killing the goose that lays the golden eggs," he said. “If persisted in, it won’t allow the goose to get enough food to enable it to grow to the stage where it might be able to Iky a golden egg.”