VALUES DROP

Evening Post, Volume CXXVI, Issue 56, 3 September 1938, Page 10

VALUES DROP

STOCK EXCHANGE

EFFECT OF NEW TAX

A STRONG PROTEST

(By Telegraph—Press Association.)

CHRISTCHURCH, September 2.

That Stock Exchange values had fallen appreciably immediately on receipt of the news of the amendments was claimed by Mr. H. Kitson, chairman of the Stocpc Exchange Association of New Zealand, when commenting this evening on the amendments which bring companies into the scope of social security taxation. Mr. Kitson, who said that he had the unanimous support of the Stock Exchanges of New Zealand in his attitude, protested strongly against the Government masking its intentions to bring companies into the taxation until the third reading of the Social Security Bill. , "This practically prevents company executives from placing before the Government their representations about.the effect of the amendment," Mr. Kitson said. "Of all the increases that have been made in company taxation, I do not think that any has come with practically no warning as in this case. It is all the more disturbing since the Government had so many opportunities of advising the commercial community of its intentions. ."It ought also.to be realised that hi these amendments the Government is departing entirely from the essence of its justification for social security. That is, that those who paid the taxation should receive the benefitsmedical'and financial. No company wants medical attention, and none will get financial assistance. '^The heavy increase in taxation must mean that the commercial expansion of companies in New Zealand will be seriously retarded. In some cases this taxation may be passed on- in higher prices for manufactured goods, thus increasing the cost of living. The contraction of national wealth must also be very considerable if this new provision is persisted in.. The adverse effect of the new taxation-on the share of companies in this national wealth will be not less than 10 per cent. This has already been shown by the serious drop in prices on today's markets, not only in companies directly affected by the new taxatioh, but also in bank shares,- which are exempt from this particular tax, but which naturally suffer from any repercussion on other companies. > THE GENERAL EFFECT. "The effect of the taxation on one particular company whose figures I took out today will show.the general effect," Mr. Kitson said. "On. its figures for IJie last year this new taxation will involve a payment of approximately £4500. Jf the taxation was on the basis of individual shareholders and their dividends!: the payment would be £693. I would suggest that when companies send dividend statements to their' shareholders in future they should show the amounts that have been deducted by the Government for taxation, so that the small shareholders would realise the amount of taxation they are paying. One of the features of this new taxation is that it will hit the medium to small shareholder harder than large companies. "Then what is going to be the ultimate fate of those superannuation funds already existing and being generously subsidised by companies? "And what about future investments iri sound enterprises. Stock exchanges throughout New Zealand have used every endeavour to guide, investors into New Zealand-controlled jand Owned companies, and this additional taxation will make it exceedingly difficult for them to justify, continuing to do so. Further, it will frighten away any capital at all inclined to be invested in New Zealand securities."