ASSISTANCE FOR INDUSTRY

Dominion, Volume 38, Issue 202, 24 May 1945, Page 6

ASSISTANCE FOR INDUSTRY

Last year the British Chancellor of the Exchequer, in his Budget, promised to assist industry by making tax adjustments designed to facilitate re-equipment and extension. In March last the Bill was brought down, and the provisions were endorsed by all sections ot the House of Commons. It had been assumed that the proposals would operate after the war, but the importance placed by the British Government upon the re-establishment of industry to meet post-war conditions is-such that the taxation adjustments have been made retrospective to April 1 1944. The chief item is one which provides for an allowance against taxable profits of 20 per cent, of the amount of any new capital expenditure on plant and machinery. _ 1 his represents a marked advance on the previous system under which obsolesence allowances were given at time of scrapping or replacement. There will also be an initial depreciation allowance of 10 per cent, and an annual allowance of 2 per cent, on new industrial buildings, and a depreciation allowance for writing off the cost of capital assets where the life on an undertaking is limited by the life of mineral or oil resources. The 20 per cent, taxation allowance for plant and machinery will cover second-hand plant installed tor mdustnal puiposes, and this is expected to result in much of the Government s wartime machinery being utilized for ordinary production. fbe allowances on buildings will include not only factories but also buildings provided for the welfare of the workers. . The intention behind these adjustments is to enable British industry to establish a sound economic basis of production so that Bntishmade goods may compete in overseas markets. One London journal interpreted them as being designed “to enable businesses to carry out efficient replacement or renewal of war-wasted equipment without mortgaging their future in order to do so.” The spokesman tor the Labour Party welcomed the Bill, which, he said, “implied the creation oi new capital on a scale never before known in this country, and expressed the hope that it would enable British industry not merely to re equip itself but also to launch out and become as efficient as ‘the industries ; of other great countries which will be our competitors m the hard and difficult years after the war.” . , i' There is of course, a sound financial policy underlying these changes, and it is fully applicable to this Dominion The intention is to increase economic production. That, in turn will help> to maintain the national income and that, it follows logically, will fortify th Government revenue. Many people here are anxious that our policy should be directed to.increased production, for in no other way can a substantial fall in the national income be averted. 1 here has been unavoidable war-waste in machinery and plant, and, under the ini petus of war, many important developments overseas which make toi more efficient, and so more economical, production. Other countries have adjusted their taxation to enable industry to make its plans lot installing the latest machinery and processes ‘‘without mortgaging t ic future in order to do so,” and that is very desirable heie. The objective in this respect was stated plainly by the London Times recently, when it said: “The aim of policy should be to ensure that all tax concessions to industry, taken together, will be sufficient to restore capital and to provide the funds required for re-equipment. The New Zealand Parliament will meet in the course of the next few weeks, and, as far as domestic affairs are concerned, interest wih centre largely on any proposals-probably in the Budget—which he Govcincnt may have to make for the re-establishment o industry on a peacetime footing. Upon those plans will depend the provision o employment for a large number of workers, and the maintenance of toe S income at a level which will make it possible to retam existing standards and carry the burdens caused by the wan