THE COUNTRY'S FINANCE

Dominion, Volume 10, Issue 3182, 5 September 1917, Page 4

THE COUNTRY'S FINANCE

The splendid success of the War Loan should relieve tho Minister, of Finance* of some of. his worries and enable him to concentrate his attention- on the taxation proposals now before Parliament. Tho accumulating load of indebtedness which tho war has forced on the country places a heavy responsibility on the Government in the matter of providing for the charge on tho revenue of the country in the way of interest and sinking fund. This charge is in l the nature of a permanent charge. It is true that it should be extinguished some twenty-five years hence, when the greater part of tho loan will fall duo for repayment, but for all practical purposes it may bo regarded at the present time as a permanent charge. It is most necessary, therefore, that in framing its taxation proposals the Government should exercise tho utmost care to distribute the burden justly and equitably. If this is not done the inevitable result will be to discourage and possibly extinguish those source* of revenue which have been drawn on to an unfair and excessive extenjt. If, for instance, those who invest their savings in companies find that this form of industrial and commercial enterprise is unduly taxed, then_ most certainly company flotation will be a most unpopular - undertaking, and tho Dominion will be deprived of _ a method of business and industrial development which has proved of incalculable value. It has been mado abundantly clear during the past week or two that tho proposed method and scale of taxing company shareholders is inequitable. Noone, indeed, can defend it. j But the point which should be most strongly emphasised has received too little attention. That is tho danger of cutting off not merely an unjustly large slice of the incomes of shareholders of companies, but of depriving them of a substantial part of their capital, the effect, being to strike a crippling blow at the whole company system. The Government cannot cut down the incomes of companies to the extent proposed without reducing the market value of company shares, thus depriving shareholders of a portion of their capital as well as a large part of their income. And this injury is accentuated by the fact that a high scale of taxation must rule in New Zealand, as well as in other countries which have incurred a huge war indebtedness, for many years to come. The problem of an equitable distribution of the increased burden of taxation is not one which concerns the country only for tbe current year, but it is one which has to be approached with the knowledge that it will be a recurring-one,for a long time . to come. It is most necessary, therefore, that the Government should face the position fairly and honestly now, so that tho injustices may.

not bo perpetuated to the immediate injury of the individual and the ultimate prejudice of tho' country. Tho fact that tho tax on companies is easy to collect, and a simple method of raising revenue, is no doubt a temptation to tho Government, but if it is not a just and ecpaitablo tax then- tho Government is false to its duty if it imposes it. Injustice breeds disaffection'; H kills enterprise and encourages evasion. The deputation of representative business men which waited on the Minister of Finance yesterday showed clearly enough the' injustice of the company taxation proposals, but it is to be feared that Ministers are disinclined to face the matter on its merits. _ Expressions of sympathy and palliatives of a minor kind will not meet the situation. . ' ■