Dividend tax review

Press, Volume CXII, Issue 32975, 22 July 1972, Page 2

Dividend tax review

(N.Z. Press Association) WELLINGTON, July 21. The method of taxing dividends was not yet satisfactory, said the •Minister of Finance (Mr Muldoon) last night. “As the new company rates settle down, I propose to give further attention to the question of dividend taxation,” Mr Muldoon told the Institute of Printers, in Wellington. The tax on dividends was bound up with investment patterns, and the tax rate on earnings from interest, he added “An alteration in the relationship between the taxing of dividends and the taxing of interest can cause a move from one form of investment to another, and that may be undesirable.” SHARE MARKET He was very conscious that the share market had been unduly depressed this year, and that there had been inadequate investment in

equity shares, particularly for expansion, said Mr Muldoon. “In the absence of the present international uncertainties, the share market would have responded more vigorously to this year’s Budget,” he said. “But in any case I believe the changes that have been made in the Budget, not only in the field of dividend taxation, but in investment allowances and expert incentives, coupled with the interest on deposits regulations announced in March, will help redress the balance in investment patterns.” COMPANY TAX Mr Muldoon said the change to payment of company tax by subsisting companies as well as P.A.Y.E. companies in two instalments, beginning next year, was the first move towards the eventual establishment of a

system which would apply to all companies on the same basis. “But I believe it will be some considerable time before this is possible.” Mr Muldoon said he felt that, in the long run, taxation should be applied differently to public companies and private companies, but this was a field which required more work. Taxation changes could only be made gradually, and during the last three years had been greatly hampered by inflation.