Excess Retention Tax Called “Unfair, Bad”

Press, Volume CII, Issue 30178, 9 July 1963, Page 14

Excess Retention Tax Called “Unfair, Bad”

(New Zealand Press Association)

PALMERSTON NORTH, July 8. “The excess retention tax which now operates only in respect of private companies and has been repealed for public companies should be abolished. From, commonsense and economic points of view this is a bad tax. This was stated in Palmerston North tonight by the chairman of the New Zealand Manufacturers Federation (Mr R. H. Stewart). He was addressing members of the Manawatu branch of the Wellington Manufacturers’ Association.

“The tax law falls harshly on smaller manufacturing companies which cannot readily go to the public for additional capital and which have always provided a considerable part of the capital needed for their expansion by ploughing back profits,” he said.

‘•This group of companies is an essential part of our economy. The smaller companies of today are the larger companies of tomorrow. “The present law is unfair,” said Mr Stewart, "and is creating a situation where takeovers of small business is an every day occurrence It is slowly dampening down competition as more and more small, efficient companies lose their identities as individual concerns.”

Expansion Harmed There was insufficient finance left in the hands of industry for its expansion. Development was best financed by ploughed-back profits but this could not be achieved if the tax-paid profits were inadequat*

“We hope th? very heavy combined company and dividend tax will be reduced,” he said.

Mr Stewart said that the key to improved industrial economy within New Zealand was productivity and the burden of ensuring that an increase was made did not rest -ntirely with the wage earner.

Management's Role

“Management ’-g a n important role to play and if industry is to becc ? more firmly established in coming years the responsibility on management will become greater. "Recent statistics show that the grc X rate of increase in volume of production has been recorded by manufacturing industries. It logically follows that by developing this secti.n of economic activity the greatest contribution can be made to our national wealth,” said Mr Stewart.

Manufacturers throughout the country welcomed the statement of the Minister of Finance that the country’s economy was expanding. Mr Lake had told Parliament in his report on the economic condition of New Zea’ nd that attention was being given to the problem of con-

trolling inflationary pressures before they developed. “We welcome such a definite statement,” said Mr Stewart. “We also welcome his statement that to achieve a continuing improvement in living standards it is necessary that a larger proportion of total spending be drawn into the type of investment which raises output per head at competitive costs.

“Although hampered in many respects, New Zealand industry, by sheer vigour and ability, is expanding. During the 1061-1962 period industrial production grew by 5.1 per cent., which, while smaller than that achieved in the previous year, was still considerably higher than the national average. Industry still has the capacity to expand, and at a fast rate, provided it is not too greatly hampered.”