SECURITY TAX

Evening Post, Volume CXXVI, Issue 59, 7 September 1938, Page 12

SECURITY TAX

CHARGE ON COMPANIES

COMMERCIAL PROTEST

MEETING CALLED

Called by the Wellington Chamber of Commerce, a meeting to which all business men are invited will be held in the conference hall of the Dominion Farmers' Institute at 11.45 a.m. tomorrow to discuss the amendment to the Social Security Bill making company income liable for taxation to meet the cost of the scheme. The decision to hold the meeting was made at last night's meeting of the council of the chamber. ! The president (Mr. P. E. Pattrick) said it was incredible that in the closing weeks of Parliament the Government apparently intended to rush the Bill through into law with last-minute amendments which were in direct contrast with the accepted canons of taxation. No one would cavil at a scheme to protect the people against the spectre of need in times of sickness, unemployment, and old age, but in his opinion the present Social Security Bill before Parliament could not achieve that object. "INEQUITABLE AND IMPRACTICABLE." The fundamental to be considered was what the country could afford, said Mr. Pattrick. The provisions of the Bill were inequitable and impracticable. The Government appeared to be basing its ability to finance the scheme, inter alia, on the assumption, that prices for exports would remain high, or else that an equivalent position could be achieved by a policy of isolation. It was an unfortunate fact, however, that this country's net overseas assets had decreased by nearly £20,000,000 sterling during S the past three years, during which New Zealand had enjoyed exceptionally good prices for her main exports, and her net assets should have increased instead of decreased. Jn face of this, the Government proposed to undertake social services, the cost of which it did not fully know. It was first suggested that they could be met without increased taxation, but the Government had since found it necessary to depart from that undertaking, and at the last moment was proposing an additional levy of Is in the £ on company profits. Mr. Pattrick said it seemed equitable that the Bill should provide that there should be some relation between the contributions and the benefits, but it did not possess such an essential characteristic. Any scheme of social security that was not founded on financial and economic security would inevitably result in social insecurity. Mr. M. G. C. McCaul said he had 4 much to criticise in the Government's proposals, but he wished to make it clear that he, along with all men of good will, approved of the principle of protecting and providing for people in their old age. This was obvious in a civilised State. The Bill, as it appeared to him, however, lacked the very virtue it should possess—security. It was top-heavy, and must collapse for want of money. "A DESPERATE EXPEDIENT." The latest effort of the Government to bolster up the scheme by imposing a special; tax of Is in the £ on company profits was a desperate expedient, and would result in infinite harm to the people, said Mr. McCaul. Companies were already being taxed beyond safe limits, and additional taxation would hasten the present ten-; dency for capital to seek other fields for investment. A higher standard of living and increased benefits could result only from increased productivity, but this was not possible if the very factors responsible for this were harassed. ' The tax on company profits would not be so serious if the present taxation was low, but already in the case of large companies it absorbed 10s in the £, and the present proposal would increase that to 11s. If the people of New Zealand and successive Governments had been content to live well within their means and accumulate instead of dissipating capital, the country would have accumulated sufficient capital to have made it more or less independent of overseas capital. "But we are a spending people, and consequently are largely dependent upon overseas capital for financing both primary and secondary industries," said Mr. McCaul. Unless that v/as appreciated, financial chaos must result in time. The profits made by the larger companies trading in New Zealand were infinitesimal compared with their turnover in goods and services, said Mr. McCaul. Many of the larger companies had instituted very generous insurance schemes for their employees which provided for death, incapacity, or retirement. These schemes were a burden on company profits, but they represented an important part of the outlook of the modern capitalist. POSSIBLE ALTERNATIVES. It was vital that the people should consider whether those companies could afford to maintain their insurance schemes if taxation was to be increased further "Bear in mind that the employees who stand to benefit from these private insurance schemes will most likely not be eligible to qualify for the Government social security scheme," said Mr. McCaul. As alternatives Mr. McCaul urged that the National Provident Fund could be extended. Smaller companies which could not afford insuranca schemes should be encouraged to do so by Government subsidies in addition to the contributions of the employers and employees. Thousands of small employers would be only too willing to sponsor such schemes. With Government assistance and administration oi the funds by the Public Trustee, he saw no reason why such alternatives could not work admirably and build up good will between all sections of the community. "I think it is imperative, that we should voice our protest," said a member. Other speakers emphasised the value of a public meeting for this purpose.