The Press FRIDAY, MARCH 10, 1967. Co-operatives v Free Enterprise

Press, Volume CVI, Issue 31315, 10 March 1967, Page 12

The Press FRIDAY, MARCH 10, 1967. Co-operatives v Free Enterprise

Mr A. S. Radford is not the first president of the Retailers’ Federation to assert that the trading activities of co-operatives constitute unfair competition. He is, perhaps, the first to claim that it is wrong “ ethically and morally that the people whom “ we employ to make and administer our laws and “ regulations should also be in direct competition “with those of us who are affected by those laws “ and regulations ”, The ethics and morals of the case are arguable, as are those of many conflicts of interest in private enterprise. Left-wing members of the Public Service Association may have a political motive in fostering the growth of their association’s trading activities; the patrons of these stores are more likely to be interested in the cut prices their store is able to offer. But the effect of a continued expansion of Public Service Association activities in this field is undoubtedly to deprive other retailers of some of their turnover, at the expense, probably, of both their shareholders and their customers.

The association is not the only co-operative trading concern, although it is the largest in New Zealand retailing. The retailers are on safer ground when they criticise the tax privileges of cooperatives generally, rather than singling out one of them. The tax exemptions of co-operative trading concerns are based on the assumption that only someone trading for profit should be taxed. This assumption is rejected by modern tax theorists—and by some practitioners. The taxation of profits, they argue, is merely an approximation to the “ true ” basis of company taxation—the use of the nation’s resources. Mining royalties and land tax are New Zealand examples of taxes on “ resource use the taxes on employment in many countries fall into the same category. Applied to retailers, the principle would substitute a tax on each employee, and on each pound’s worth of land, buildings, and stock, for the present tax on profits.

A tax on resource use would “catch” the cooperatives. Mr Radford would like that. It would also benefit the more efficient private enterprise retailers, who get the highest turnover for each employee, each square foot of selling space, and each pound’s worth of stock. It would, however, oblige the inefficient retailer to pay even more tax than at present; and some of Mr Radford’s members would not like that.