TAX TAKES PROFITS

Evening Post, Volume CXXIV, Issue 70, 20 September 1937, Page 12

TAX TAKES PROFITS

INDUSTRY'S BURDENS

How taxation and the 40-hour week combined have affected returns to shareholders was the subject of criticism by the chairman of the Kaiapoi Woollen Co., Mr. A. McKellar. Speaking at the annual meeting of the company in Christchurch on Friday Mr. McKellar said "the company was called upon to pay £ 10,385 in land and income tax during the year—an amount equivalent to 4 per cent, on the ordinary share capital of the company, or almost 3J per cent, on the whole of the company's capital. This amount is charged into the accounts for the year, thus reserving intact the £3000 which stood in the 1936 accounts, and the £6000 further reserved last year for this purpose. To these amounts it is now proposed to add a further £1000, bringing the amount up to £10,000, approximately sufficient to meet a tax payment on the surplus shown in this year's accounts." Mr. McKellar also said that the surplus was not as large as in the previous year, owing to heavy increases in taxation; it was sufficient to pay 5 per cent, on all classes of shares and still permit some further strengthening of reserves. A sum of £7000 had again been sot aside for depreciation. "Compa2'ed with the previous year," Mr. McKellar observed, "gross profit has improved by £6248 and stands at £92,177 for the year, but. on the other hand, the cost of operating the company's business has moved up to £67,677, an increase of £10,773. This, of course, does not represent the full increase in costs which the company has been confronted with, the greater increases being in the manufacturing accounts. .

"Your directors are firmly of the opinion that if a shorter working week had not been imposed by statute, a considerably increased surplus would have been available. During the greater portion of the year we have experienced difficulty in meeting the demands for our productions in the manufacturing time available." The chairman's motion for the adoption of the report and balance-sheet was seconded by Mr. G. W. Armitage, who contended that it was unfair that the Government, under the guise of company taxation, should confiscate 7s 6d out of every 20s earned by the company in profits. It would be thought that a large manufacturing company, giving employment as it did to many, and spending tens of thousands in buying New Zealand wool, and paying several thousands a week in wages, would receive favourable consideration.