The Press SATURDAY, MAY 23, 1964. Manufacturers’ Complaints

Press, Volume CIII, Issue 30448, 23 May 1964, Page 12

The Press SATURDAY, MAY 23, 1964. Manufacturers’ Complaints

There is much good sense, as well as some special pleading, in the submissions on taxation made to the Minister of Finance (Mr Lake) this week by the deputation from the New Zealand Manufacturers’ Federation. The manufacturers’ plea for simplified tax legislation and procedure will be echoed by company secretaries, public accountants, and taxpayers from all walks of life. Their objection to the excess retention tax is hard to rebut; this tax has no sound basis either in economics or in business practice. Introduced primarily as a device to prevent evasion of the dividends tax, the excess retention tax could well be abolished in favour of simpler measures. The tax discourages the high rate of company saving that is necessary to lift capital formation above its present low level. Export incentives which are both simple to administer and equitable to all exporters are difficult to devise. The scheme put up by the manufacturers does not appear to satisfy these criteria. They are on safer ground when they seek higher depreciation allowances on plant and machinery. They point out that, in an age of rapid technological advance, “ depreciation allowances ” may be more aptly described as “provision for obsolescence”. If New Zealand industry is to be competitive, it must have up-to-date equipment. What the deputation failed to acknowledge, however, is that much capital equipment in New Zealand is at present not being used to best advantage. The Government could meet this representation most effectively by permitting double depreciation on equipment used in factories working two shifts (and treble depreciation for three shifts) and by giving priority in import licences for capital equipment to those firms working more than one shift. The deputation’s case for the abolition of the land tax, and possibly other minor taxes which are expensive to collect, deserves consideration.