Taxation level defended by N.Z.’s big companies

Press, 31 March 1981, Page 1

Taxation level defended by N.Z.’s big companies

Several of the biggest New Zealand companies yesterday strongly defended their level of income tax payments after criticism at the week-end by the Labour member of Parliament for Auckland Central, Mr R. W. Prebble.

A number admitted they were now concerned about what they called “extreme views” towards business being put forward by some sections of the Labour Party, according to the Press Association from Auckland. The managing director of N.Z. Forest Products, Mr D. O. Walker, referred to Mr Prebble’s claim that bigger companies, by paying little tax, were “ripping off” the community while individuals paid too much. He said the claim did not take account of the whole problem in the economy and ignored the purpose of export tax incentives. Mr Walker said there was an urgent need for New Zealand to maximise exports to meet imports and invisible payments and export tax incentives were designed to encourage this. With international freight costs and the New Zealand dollar being fixed at a higher value in relation to its true value creating a disability, companies required assistance to compete bn overseas markets. He said Mr Prebble should look at what the incentives were and' what they were designed to do — a role probably not generally understood by the public. “Employment of people in New Zealand depends on having a greater market than the three million

• people who live here,” Mr Walker said. “I, too, support the argument that the individual pays too much tax, but this is better attacked by - looking at Government expenditure than by looking at companies dealing on exports. “If Mr Prebble is calling on companies to continue to create jobs for the people he claims to represent, he must be mindful of the requirement. for capital investment which must be put in before there are any jobs.” Mr Walker said suggestions that “rip-offs” were benefiting shareholders in the companies was not reflected in higher dividends. N.Z. Forest Products paid $5.7- million tax on profit of $29.2 million last year, “but that $29 million was well below an inflation level return on shareholders investment.” The managing director of the Fletcher Challenge subsidiary, Tasman Pulp and Paper, Mr L. C. Ryan, said;.’-the accusation of “ripping off” was not right as export and tax incentives used by companies were planned and instituted hy the Government. He said the reason Tasman had not been paying tax when profits were high , was because of allowances accumulated over the years when profits from exports were low. Tax losses able to be off-set against future income totalled $3l million last year.

Mr Ryan said these would all be used up next year and the company expected to be paying tax then. Any attack on export incentives would “pull the rug out” from under the export effort of all companies, big and small, he said. Support for Tasman was high because its total exports were high — approaching $2OO million. Yet the incentives supported small companies on a proportionate sea *?. Mr K. F. L. Carter, joint managing director of Carter Holt, another company named by Mr Prebble, said. “The export tax incentive is one of the best things New Zealand has got working for it. “Without it we would crumble. We would be working in sackcloth and ashes, it is totally misunderstood.” Mr Carter said internal attacks on the tax incentives were potentially damaging to the export effort, particularly in view of recent moves by overseas markets to reduce New Zealand’s large exports. He said the United States had already attempted penalties against small but successful exporters by labelling the incentive as a subsidy. ■ "What scares me is the damage these statements do to small companies attempting to export, as well as the large.”