“RACKETEERING DOCUMENT”

Dominion, Volume 23, Issue 257, 26 July 1930, Page 12

“RACKETEERING DOCUMENT”

Budget Roundly Condemned

PROFLIGATE GOVERNMENT

“Nothing Like It Since the War Days”

In the main, editorial comment on the Prime Minister’s first Budget is far from complimentary; indeed, the Auckland “Star,” a United organ, confesses that “there has been nothing like it since the days of the war.” Some extracts from metropolitan dailies are given below.

“New Zealand Herald”

“The Financial Statement is a budget of a profligate Government. The country which is to suffer by its exactions and its trifling with the grave question of economy can come to that conclusion definitely without qualification and without any fear of doing an injustice,' The evidence is written clearly on the face of the document. The Prime Minister estimates the yield of his new taxes as £1,600,000. If that is accurate—and the regularity with which official estimates of taxation prove under the estimates is notorious—the increased load piled on to the country by this Government surely breaks all records. In this, as in its administration, the profligacy of the Government stands unparalleled, just as the Budget which has just appeared is without peer for severity of exactions proposed. Dire penalties are being inflicted on the taxpayers because of a mixture of extravagance and opportunism which have succeeded the Hon. W. D. Stewart’ ■ careful management. If the other groups in Parliament do not call the Government to account the country must do it, for the burden now cast upon the community cannot be borne while the United Party continues its rake’s progress.

Auckland “Sun”

“Honest George Forbes has flung his first Budget in the. distressed faces of the taxpayers, and also has thrown with it the fate of his incompetent Government. It need not be pretended that the majority of the Dominion’s thinking people will have any other thought more dominant in'their minds to-day than the hope that this racketeering document will be the last of its kind to be presented by the new Leader of the Unite’ Ministry. In every way the Financial Statement which provoked the embarrassed amazement and derision in the House of Representatives last evening is the most drastic Budget that has ever been foisted upon this generation of New Zealanders. In a word the Forbes Budget is so bad in its exploitation of every source of revenue that the Opposition should put the Government out and test the mind of the country on the Government’s filching policy.”

Auckland “Star”

The first thing that should be noticed about the Budget is its courage. It may go too far in calling up reserves of taxation to fill the gap in the depleted ranks; it may have several faults in detail, but it is at least the work‘of men who see danger plainly and are not afraid of incurring unpopularity in meeting it. An increase in taxation is always unpopular, and a Government whose own party does not provide it with a majority might be expected to be particularly chary of incurring such unpopularity. In this position, however, the United Government has this week brought forward taxation proposals that hit every class and every individual in the country, from the humble smoker and frequenter of the kinema to the man who drives a big car and the company with a large turnover. On top of increased Customs duties come higher taxes in every direction — laud and income tax (though the special tax on large holdings levied last year is repealed), totalisator tax, stamp duties, death duties, and amusement tax. There has been nothing like this since the days of the war. It is impossible to believe that the Government would make such proposals if. they were not convinced of their necessity.

“Otago Daily Tinies”

“The Budget makes a lugubrious showing in the light of recollection of the spectacular promises of a party which was popularly supposed to possess among other powers the secret of being able to reduce taxation, and in one direction at least has shown a peculiar regard for economy by persisting in expensive railway construction. It is at least a matter for satisfaction to find Mr. Forbes committing himself to the statement that a stage has now been reached when great care must be exercised in determining what additional undertakings should be carried on with borrowed capital. A first brief survey of the Budget proposals is sufficient to reveal that it contains more than enough matter for controversial discussion. The community has to realise the necessity that exists for the curtailment of overspending, both public and private, The Government is entitled to credit for endeavouring to do its best in the face of a difficult situation and in the discharge of a disagreeable task. That it has been vouchsafed any real inspiration in its consideration of ways and means to the end in view will certainly not be so readily admitted.”

Dunedin “Evening Star”

“It was self-evident that with a contraction of the national income due to world-wide causes the Government would require a heavier rate of taxes and restrictions would have to come. Mr. Forbes put the position plainly in his first pronouncement as Prime Minister. Now we have the full statement of the remedies which he finds it necessary to apply. It is a grey statement, but it is irreproachably lucid. Of the new taxation the best that can be said is that it has been prepared so as to fall upon every one, and a certain proportion of it will be optional. Those who care to go without luxuries can avoid it. . . . It is to be hoped that the assurance that borrowing is to be restricted will mean more than it _ has done on past occasions. If it had been restricted earlier some of these imposts would not be required. They should not be required, however, for any long period if the whole community braces itself together to make the best of adversity. . .. Mr. Forbes’s medicine is preventive rather than curative. We have not got a deficit of three millions on our finances, and we shall not have it or any other deficit if his recipe is followed and gives the results expected. Avoidance is most necessary, because there was a deficit two years ago, a repetition of which was only avoided last year by the taking of special precautions insufficient to hold it at bay for a longer time. A country dependent on overseas investors for the greater part of the capital required for developmental purposes cannot afford to impair its cred.’ 1 : by deficits.”

STILL EXPECTED The New Petrol Price There still seems to be some uncertainty as to when the price of petrol is going up, and many a motorist heaved a sigh of relief last night when he filled his tank and found that he was still being charged 2/- a gallon for first grade petrol. Service-station proprietors seemed _as vague as ever about the change of price. They could not say whether the price would go up this morning or not. for no instructions on the matter had been issued.

“UP IN ARMS”

Motorists and Petrol Tax “The motorists of the Dominion are up in arms against the proposed threepence tax on petrol and the Budget proposals generally,” ’ declared Mr. H. J. Stott, secretary of the Wellington Automobile Association, to a “Dominion” reporter yesterday. “We have had several meetings today, and v;e have telegraphed to every one of our affiliated clubs in the North Island Motor Union, asking them to take the matter up in their respective centres. “We have also telegraphed to all members of Parliament, asking what action they proposed to take regarding the increased petrol tax, and I have already received replies from two MJ?.’s supporting our protest. “It is also intended to convene mass meetings of motorists throughout the country to protest against the increased tax on petrol and the Budget proposals. The Wellington meeting will be held early next week if a suitable hall can be secured. _ “We have prepared a statement setting out by graphs just how the proposed increases m the Budget will affeet motorists, and this will be available early next week.” “DOUBLE TAXATION” Share Transfer Duties Sharebrokers view with much alarm the Budget proposal to impose stamp duty upon transfers of shares in overseas companies at the same rate as is payable on the transfer of shares in New Zealand companies. Mr. R. Wyn Kirkby, chairman of the Wellington Stock Exchange, and president of the New Zealand Stock Exchanges Association, said the proposal, if carried into effect, would mean that investors in shares would be mulcted in double stamp duty—they would have to pay the New Zealand duty and also the stamp duty in Australia or other country in which the company was domiciled. There was considerable trading in the Dominion in the shares of Australian companies, and it was iniquitous that investors should have to pay double taxation on their dealings. The extra taxation payable in New Zealand stamp duty on transfers of overseas stocks and shares would represent a heavy impost on the investor, and it was to be feared that it would tend to restrict business greatly. It appeared, too, said Mr. Kirkby, that the sharebrokers had been “sorted out” for heavy taxation on their businesses in another direction, as it was proposed to raise the annual license fee from £2 to £5. This was an increase of 150 per cent. That the position was viewed with some consternation by sharebrokers was evidenced by the fact that his telegrams to the other main centres had been crossed by messages from the chairmen of those stock exchanges expressing concern at the proposed increases of taxation. In all' probability a deputation representative of the Dominion Stock Exchanges would interview the Minister in Wellington on Monday.

BANK-NOTE DUTY

Increase £96,000 a Year

The increase in the duty on bank-notes which it is proposed to make under the Stamp Duties Act, will mean additional taxation of the six banks trading in the Dominion, amounting to over £96,000 a year. The present rate of 15/- per cent, on the average amount of notes circulating during eacli quarter is to be increased to 22/6 per -cent. The increase, which will operate as from July 1, means an increase from 3 per cent, to 4J per cent, per annum on the bank-note duty. The averages of the note circulations of the six associated banks for the last four quarters were as follow: —

September 30, 1929 .... 6,272,354 December 30, 1929 .... 6,544,522 March 31, 1930 ...>«»•■ 6,417,038 June 30, 1930 6,433,264

This gives an average for the twelve months ended June, of approximately £6,416,000, the duty on which, at the new rate of per cent, per annum, will be £256,670. At 3 per cent, the duty would be £102,480, so that the new rate represents an increase of roughly £96,240 a year.

AMUSEMENT TAX

Out After Every Penny

“We were imagining that the Government, the head of which promised to reduce taxation, would abolish the amusement tax altogether and so help to rid us of this atmosphere of depression,” said a manager of a permanent show yesterday. “But instead of that it is at the throats of the people for more moneyeven to the poorest people who are able to see the pictures in the daytime for as low as a shilling. From our point of view it is very disappointing, as it must have some effect on business—and that has been none too good this winter.” The proposed new tax even imposes a penny tax on all shows and games to which the humble shilling is now charged For example, the thousads who occupy the bank at the Athletic Park every'Saturday are included in the new tax. Not only that, but every bazaar, church concert and entertainment, for which 1/- admission was charged, was penalised by the imposition of another penny. As the prices of admission rose so did the tax until a 10/- charge meant 11/-. The following comparative table shows the difference between the present and proposed amusement tax; — Prices of admission Old tax New tax

TAX ON FILMS

"Exceeds All Bounds’

EXHIBITORS’ VIEWS

Government May Lose Revenue

The Film Exchange Association of New Zealand held a meeting yesterday afternoon to discuss the proposed taxation on kinematograph film. The proposal is to tax the exchanges 25 per cent, of the returns on each picture (monthly), after allowing for local overheads and distributing exjTjmses. At the meeting the opinion was expressed that the proposed taxation was more than the industry could reasonably stand at the present time. The proposals, it was stated, had come as a great surprise, as when interviewed by the association’s representatives only on Tuesday last, the Prime Minister had promised to give the matter the most careful consideration before anything definite was decided upou. “Practically Confiscation.*’

The proposed taxation, which was practically confiscation, involved anomalies that could have been avoided by an examination of the situation. It was possible, under the new proposals, for a man to buy a film, say, for £2OOO. His expenses in attending to the marketing would possibly run into £l5 a, week, and might bring him in £4OO for the first month. On the computation that it would mean £2OO profit, he would have to pay £5O (25 per cent.) to the Government. The next month might bring a similar return, and again he would pay another £5O to the Government. Then if that film were burnt or destroyed accidentally, he would have paid £lOO to the Government and lost £l2OO besides. It was computed that the new taxation meant an impost of 15 per cent on the gross receipts irrespective of whether the film showed profit or loss. Delegates stated that the Government had viewed the whole question as though there was no charge for the film itself—it made no allowance for the royalties on account of the original cost of the production, the printing of the film, or even on freight charges to bring the film to New Zealand. <•

No country in the world was harder pressed for money than Australia, and there the Government authorities had been reasonable, calculating 30 per cent, of the returns from pictures for the purpose of taxable income—£2 per cent instead of £25 per cent. In New Zealand. At the same time the companies had not been relieved of the ordinary income tax (12J per cent, on the gross turnover) or the duty on film (Id. per foot plus the surtax), so the only conclusion to be arrived at was that the tax was a confiscatory one. “A Grab." One exchange manager said: “It is not a tax—it is a 25 ger cent. grab. I do not see at present how we are to continue in business if Parliament agrees to the iniquity.” “It is reminiscent of a similar grab of 25 per cent, of the profits attempted by the Lang Government in New South Wales a few years ago. In that instance the matter was taken to the courts, and while it was before them there was a change of Government, and the whole thing was dropped. In its place was substituted a taxable income on 30 per cent, of the receipts, that is to say that £3O out of every £lOO was regarded as profit and taxed accordingly.”

“EXCEEDED ALL BOUNDS”

Modification Imperative

“The Budget so far as it concerns the picture business of New Zealand is a bombshell!” said Mr. Beaumont Smith,, managing director of Williamson Films (N.Z.), Limited. “The picture industry fully expected to bear its legitimate share with everyone else in the inevitable increased taxation, and was prepared Willington to bear it, but it never dreamed it would be singled out by the Government in what amounts to virtually State Confiscation.

“I stated in ‘The Dominion’ six months ago that this impression was erroneous, and that the average film hire paid by a theatre was twenty-five per cent, of the gross receipts, and often fell as low as fifteen per cent. Out of this all charges for handling the film, such as duty, freights, salaries to a host of New Zealand employees, railway transport, etc., had to be paid. lam not voicing the views of any foreign film exchange. lam only examining it from the point of view of a theatre owner. The New Zealand exhibitor or theatre owner cannot live at the present time without American films as the backbone of his business, though British films of high standard are being produced now and are giving great and welcome contrast in picture entertainment to-day. I have carefully analysed the proposed taxation so far as film exchanges (or distributors) are concerned, and it is evident that the taxation amounts to anything between 22 per cent, and 30 per cent, of the entire revenue received by the distributors from the picture theatres. No business can be expected to carry on successfully that has approximately 25 per cent, of its turnover taken in taxation.

Vital Questions.

“The question that the theatre-owner is vitallv concerned in is: “Whether it will possible pay the American producers to carry on business in a country where at least one-quarter of their total earnings is taken by way of taxation. “Personally. I do not think they can carrv on profitably. Additional taxation was*expected, and probably justified, on foreign companies operating in New Zealand, but the Government has exceeded all bounds of justification. Should the local offices of American film exchanges find that it is impossible to carry bn business after the imposition of this confiscatory tax, and closle their offices, four hundred theatre proprietors from Whangarei to the Bluff will be left without sufficient films to carry on their business. , . . -j “What will be the use of imposing Id. on 1/- tickets, 2d. on 1/6 tickets. 3d. on 2/-, and so on, if exhibitors have practically no films to place before their patrons? If the Gor.nment intended to introduce a luxury tax in an endeavour to prevent American film coming to the country, they have every hope of succeeding. “A modification of the proposed him taxation is imperative, otherwise it may be found that the additional revenue the Government hopes to gain will not be forthcoming and the revenue it lias derived in the past will be greatly reduced.

The Showman’s Viewpoint

The exhibitor of film, apart from the film exchange managers, is not so very much perturbed at the proposed new taxation on film. „ One of them stated to a Dominion reporter yesterday that the tax seemed to be far too drastic, but it did not hit the exhibitor directly, as the mm e -‘ changes could not very well pass it on. The position to-day was that the exchanges knew pretty accurately how much every theatre owner or manager could pay for film and keep going, and thev were able to get a fair thing, and often something better. If more were charged, together with the increase in the amusement tax, it might have an effect not desired by the exchanges. Hie now tax. if it were imposed, hit the exchanges direct according to the earning nower of the picture. It appeared to be a matter for the Government to dernd# what should be paid for American film, hut it would be wise not to kill tho goose that laid the golden egg.

Cd. Nil Nil ' 1/Nil Id. 1/- to 1/6 Nil 2d. 2/Nil 3d. Over 2/- to 3/3d. 4d. 3/- to 4/4d. 5d. 5/Cd. 7d. 6/7d. Sd. 7/8d. 9d. 8/9d. 10d. 10/lid. 1/-