TAXATION OF OWNERS

Evening Post, Volume CII, Issue 37, 12 August 1921, Page 3

TAXATION OF OWNERS

TO IHI EDITOR.

Sir, —Apropos the argument in certain quarters that tbe Government is pursuing a policy of discrimination to the detriment of the country's finances by not requiring owners to include in their income tax returns the amount of stakemoney won, I would refer you to the following article which I have preserved from the columns of The Evening Post of sth August, 1913:—"For the first time in the history of New j Zealand, racehorse owners' have recently been asked to furnish the Commissioner of Taxes with a return showing the total amount of stakes won by their horses, together with the amount of expenses involved in connection with the achievement of such results. 'The object of their request is quite clear: The proposal is that owners should pay income tax on any net profit that may have accrued to them during their past financial year from the source indicated. Therein important principles are involved, in which even the non-racing section of the public, as well as those who actively participate in the affairs of the Turf, is concerned. If profits made through the racing of horses are to be taxable, it necesE&rily follows that losses incurred in connection with the same pastime will be deductible from the taxable portion tit owners' ordinary incomes. This being so, the new form of taxation must inevitably result in a direct loss to the public revenue. It will mean that whilst the few exceptionally lncky owners will be called upon to subscribe a comparatively small extra sum to the public funds, the vast majority of those who pay training fees'will find their income tax materially reduced. Apparently those in charge of the Department are of opposite opinion, and mistakenly imagine racing to be a most profitable business. The facts are, on the other hand, that, as a general rule, the ownership of thoroughbreds in training is a most expensive luxury. There is no doubt of this whatsoever. During the season 1911-12 there were approximately 1880 horses in training in the Dominion, and this number has probably not since diminished. The expenses in connection with each horse remaining in a trainer's charge throughout the racing year will, on the average, run to between £250 and £300. Due allowance being made, however, for those that were only'in commission for more or less Short periods, we shall be well within the mark if we put down the cost at £200 apiece, or £376,000 in all. The total value of the stakes distributed by the whole of our racing clubs . during the season just closed was, again approximately, £211,----000, and owners had, collectively speaking, therefore, to meet a deficit of something like £165,000. This, in addition to whatever personal expenses they may have, incurred in visiting their training establishments and journeying to race meetings for the purpose'of seeing their horses- run. Hence, instead of the public i, funds deriving any benefit from the new form of taxation, they will suffer a substantial loss. Not only will the taxable portion of the incomes of racehorse owners be reduced to the extent of their collective losses; there are the owners of trotters to be considered. They, too, h'av^ to pay for their sport; and it is safe to assume that the total shortage under all heads will not be less than £250,000. All things being considered, it seems fairly obvious that the Income Tax Department's latest move is ill-ad-vised."-

The above clearly explains the position, and the Government .evidently found that such a return would result in a decided loss of revenue, a loss which under the existing high scale of income tax would be materially increased.—l 'am, etc.. ONLOOKER: 11th August.