TAX ON INCOMES

Dominion, Volume 13, Issue 308, 22 September 1920, Page 8

TAX ON INCOMES

CHAMBERS OF COMMERCE CONFER ROYAL COMMISSION DESIRED CRITICISM OF CLAUSES IN NEW BILL The Land and Income Tax AmendmentBill was discussed by n conference of delegates of Dominion Chambers of Commerce, held yesterday in the council room of the Wellington chamber. The conference was called mainly at the suggestion of the Wellington body, which lu»' taken great interest in tho Bill. Mr, A. S. Bankart, of Auckland, was elected chairman.

Tho fact that revenue had to be found was referred to by the chairman in his opening remarks. Whether the Treasury was not making too great a demand on tho Land and Income Tax Department was a matter which was open to discussion. The Commissioner of Taxc9 was i willed on to find about 50 per cent, of that portion of the total revenue not provided by the Public Services, such as railways or tho postal and telegraph services. "If that amount," said Mr. Bankart, "could be shown to he detrimental to the general interests and. development of the country, then some other source of taxation might have to be found, such as an export tax. However, tho members of tho conference will probably agreo that the question i 3 so vital that tho Government might 6st up a Royal Commission to deal with the whole subject."" Mv. Bankart considered that the Prime Miilister'might reply that the report of the Royal Commission on the income tax question, set. up in England, was already in the hands of the Government; but he thought that while tho evidence brought before that commission was applicable to the extraordinary ramifications of trade in the United Kingdom, many of the statements accepted as axioms wero open to challenge as applied to the comparatively compact conditions of trade obfaining,ln this Dominion. He urged that it was advisable to reinstate the clause in the Bill whereby business premises were exempted'from tho operation of the land tax.

On the motion of Mr. G. Frostick (Christelnirch) it was resolved: "Tlmt the interests involved by the Land and Income Tax Amendment Bill are so vital to the prosperity of the commercial. an<t trading community of this -Dominion that the Government bo asked to postpone consideration of this Bill in Parliament until next session, and in tho meantime to appoint a Royal Commission with full and unrestricted powers to malce inquiries."

Members of tho conference considered tho meeting might, suggest tho personnel of the Royal Commission, which should consist of various sections of tho community. Sections of the Bill Discussed. There was a general discussion on each clauso of the Bill. The conference decided to urge the reinstatement of tho clauses providing for the removal of business premises from the operations of tho land tax. It was also decided to recommend that income received front superannuation and investments bo exempted, with a limitation. The conference favoured' the taxation of municipal trading concerns. Keferring to clauso 14, Mr. M. A. Carr (Wellington) said ho considered that tho clause proposed to charge income tax on debentures held by investors out of Now Zealand. There would probably ho protests from abroad over the clause, and overseas investors in New Zealand securities might consider the clause a breach of faith. Mr. Carr referred to the Theodoro Acts depreciating tho value of private securities, on which British money had already been lent, and cited the poor response to the appeal for further loans by tho Queensland .Government. 'I'he proposal of tho New Zealand Government was impolitic, if not unjust. The move came a.t a bad time, when the Imperial Government had extended some recognition to complaints about double taxation whjch had been coming from overseas Dominions,

tended some recognition to complaints about double taxation whjch had been ® coming from overseas Dominions, ! The decision of the conference was to il view with disfavour "tho proposal in section 14, whereby paragraph (h) of sec--3 tinn 84 of tho principal Act is repealed." -• The redrafting of sub-clause 3of clauso P 15 was urged in order to obviate am'o biguity,_ tho sub-clause reading:—"The t earned income of any taxpayer shall not 0 in any year be deemed to exceed the sum t of .£2OOO. 0 On clauso 16 the conference decided:— [" "That tho total amount recoverable bo '■ limited to tho amount by which 'the tax- '• payer has benefited, by reason of the 10 allowance of depreciation made in form- =" er years." ■® Complaint of complexity wa-? mado ■® against clause 20, the chairman favour- '[ inj; the delotion of tho clause. d The Debenture Question. ° The question of 'debentures and the tar was discussed after tho conference 'f resumed in the afternoon. Mr, H. D. d Yickery said that 'debentures in the 0 past had meant "secure" money, and the >' provisions of the Act would militate " against this. Mr. Bankart referred to r coii-panies that had issued debentures on 3 a sliding scale. By attempting to reach these cases tho Government was inflicting' an injustice generally. The new provisions were cumbersome, and the j new clauso might have the effect of doing away with debentures. N The conference decided that section 22 wns inadvisable as shutting up an avenue e of investment, from which Webenture e canital had hitherto been raised. Supplementing his previous statements, f Mr. M. A. Carr considered that tho 1 smaller investor would object to paying - 3s„ and the larger investor would' not feel disposed to pay tax under the sec- - tion. when it was taken as assessable in- , come. The clause would act as a doublei edsred sword. r The conference decided to refer clause 23 to the forthcoming Municipal Confei--3 ence. Regarding the- clause affecting the in--5 come of co-onerative' eheeso factories and 3 dairy factories, it was explained that such concerns, under clause 15, wero now taxpayers. Mr. H. D. Bennett stated that under the existing Act, such companies were not taxed. The tendency of co-operative concerns was to increase trade, and' there were no objections to tho clause. Importance was attached to clause 20, regulating assessment, it boing considered that under the clause a grievous mistake might bo made, and no redrew given by the Department. The Schedule. Expressing his opinion on the schedule, Mr. Bnnkart thought that there was a lack of information as to how much money was actually required. Tho time had come when suruluses should not be built up, but should bo usejd. He took it for granted that the Government would get a great deal moro money than it required. A delegate: They don't propose to reduce tho war debt here by the increased taxation! The following resolution was carried "The conference has no evidence before it to show what revenue is anticipated from the schedule, but as apparently most surpluses in former years were secured from this source, and the same substantial surpluses are not now required, the conference confidently contemplates that the Commissioner will be able to recommend a reduction in the surtax rate." Tho conference will be continued this morning at 10 o'clock. , SUGGESTIONS TO MR. MASSEY OPPORTUNITY FOR CONSIDERATION PROMISED. ' References were made in the Houso of Representatives yesterday to the Land and Incomo Tax Amendment Bill. Mr. Massey stated that tho Bill would bo committed sufficiently long after the second reading to give peoplo an opportunI ity of familiarising themselves with tho Government's proposals, and of making susKestioii6 to the Government. The subject was first mentioned by Mr. ,T, P. Luke (Wellington North), who asked whether he might forward to the Prime Minister for. his consideration certain communications dealing with the Hill ns il affected life insurance societies and investors, Mr. Miresey said that he did not propose to make a eecond reading speech

then. Ho advised Mr. Luko to send along tho documents referred to. There had been n great deal of discussion in connection with the Bill, and in consequence he intended to make certain terations, though perhaps not very important alterations. He proposed to take tho second rending some day this week, and the committal at the end of another week, so as to give those who tiesired it an opportunity of making suggestions to tho Government. What the Bill contained would he made perfectly clear during the second reading debate, Mr. M'Combs (Lvttelton) suggested that (is the proposed tax on municipal debentures was likely to hamper local bodies in the raising of moneys they required, the Prime Ministe-r ought to make some announcement there and then. with a view- to easing the position. Mr. Massey said he thought that when the local bodies saw the Bill they would havo no cause for complaint, or at any rate very little cause for complaint. The debenture tax at present wns a flat rate of 2s. 6d., and ho did not think that by nil increase of the tax to 3s. the financial position of local bodies would lie affected. It might not bo a disadvantage to bodies if their borrowing operations wcro checked for a little time. They were asking at present for many millions, and he wns quite certain that if they got tho money they could not upend it to advantage just now.