TAXES PAID BY BANKS

Evening Post, Volume CXIII, Issue 142, 17 June 1932, Page 9

TAXES PAID BY BANKS

SUBSTANTIAL INCREASES

"UNFAIR ASSESSMENTS"

Taxation 'paid by banks in New Zealand and' contributions made' to the revenue fey the Bank of New' Zealand in particular vat, the subject o£ some comments made by, Mr. Oliver Nicholson, chairman of ..the Bank of New Zealand, to-day.

, The Bank of New Zealand, he showed, tad paid during this year to the Government by way of dividends and taxation a total of £614,248,. viz., dividends, £245,312; income tax/ £239,867; land tax, £2409; note tax,' £156;660. Last year it paid, £594,263, as follows:—Dividends, £245,312; incoma tax, £196,524; land tax, '£18,863; note tax, £133,564.- - BANK'S INCOME TAX. "It has been mentioned on, previous, oci casions," said Mr. Nicholson, "that the system under which the banks are assessed in 'New Zealand' for income tax has for many years been extremely unfair. At present, owing to the abnormal amount of bad. debts-incurred, it is operating with particular hardship. . "It will come as a surprise to most people to learn that banks are not permitted' to include" bad debts in the •various, deductions allowed in assessing their taxable income. For instance, if the New Zealand profits for the year were one- million, or half a million, or none at all, thesame amount of income tax would be payable; or to put it another.way, if we had earned 7 per cent, 'on our advances no I greater, amount of taxation would be | payable than if we'earned only 5% per cent. Were' we taxed as a' joint stock company we would be assessed on our actual'earnings, bad debts being deducted.

''THERE MUST BE,A LIMIT." "Irresponsible persons look -upon a reduction o! % per cent, in interest rate as .being somewhat trifling, but in the case of this bank it represents a-reduc-tion'of profit by about £110,000 a year. Such reduction of profits, as I have said, w6uld, under the present system of taxation imposed upon banks, carry /no reduction of taxation.

- "Last year we paid the Government £49>985 more taxation than in the previous year, and our total Tates and taxes on the. whole of' our business shows an increase for the year of £56,950. I may add that of this year's profits of £587,023, no less, than £310,925- was represented by interest from free of tax British, Australian,, and New<. Zealand Government, securities. These securities, of course, carry a lower rate of interest than those that are subject to tax. It is recognised that in times' like the present taxation must .necessarily be heavy, and that .wealthy institutions must expect to be heavily burdened. There must, however, be a limit to excessive exactions."