RETENTION TAX

Press, Volume CII, Issue 30190, 23 July 1963, Page 16

RETENTION TAX

Abolition To Be Sought (N.Z. Press Association) WELLINGTON, July 22. A remit calling for the abolition of the excess retention tax was carried by a committee of the National party conference today after the Minister of Finance (Mr Lake) had spoken against it. Mr Lake said the Govern-

ment considered the excess retention tax must be retained because dividend taxes would go up too much if it were abolished.

Dividend tax brought in between £9 and £lO million, he said. “If we allowed private companies to keep the money, it would result in too great a loss of revenue.”

A remit asking the Government to spread exemption from the excess retention tax to all companies which needed the money for plant or buildings was carried. At present companies may be granted exemption only on proof that the money is needed for "productive" plant or buildings. Mr E. S. Ralls (Marsden) said small companies could not afford to disburse 40 per cent, of their profits and buy new equipment with the remaining 60 per cent. A carryin; company, for instance, had to pay about £3OOO for each new truck it put on the road. A remit passed asked the Government to reinstate the provision for a 30 per cent, special depreciation allowance on plant and machinery during the first year. Mr R. O’Hara (Pahiatua) claimed this was an important step to help build up New Zealand’s overseas funds. It would give a great incentive for investment in new plant.