AN ACT OF JUSTICE

Evening Post, Volume CXXXVII, Issue 95, 22 April 1944, Page 6

AN ACT OF JUSTICE

The Government's decision to introduce a scheme of deferred maintenance expenditure for individuals and' companies in respect of the payment of income tax, the social security charge, and the national security tax, is a measure of' justice which will be appreciated by business men and farmers. Owing to war conditions, resulting in a shortage of both labour and materials, a great deal of maintenance work, both in factories and on farms, has had to be postponed. Up to the present, however, the money thus saved has been -subject to taxation. This has meant that business people and farmers have been unable to build up reserves to meet costs of maintenance and renewals after the war, when labour and materials again become available. Numerous protests have been made against the obvious injustice of this procedure, and it is a matter for satisfaction that the Government has at last seen the fairness of allowing reserves to be set aside without their being taxed. The scheme announced by the Minister in Charge of the Land and Income Tax Department (Mr. Nordmeyer), although somewhat complicated, appears to be reasonable. Business people and farmers who desire to take advantage of.it will be required to deposit with' the Treasury an amount approved by the Commissioner of Taxes as estimated deferred maintenance, and. this will become available to them after a period of twelve months.

It will be noted that money deposited under the scheme will be non-interest-bearing. £his has probably been done to discourage persons from taking an undue advantage of the scheme. By lodging their capital with the Treasury they will incur an initial loss of interest which must be set against the

taxation relief. There is a precedent for this in the British scheme, which provides fora refund after the-war of portion of income tax payments. Taxpayers receive no interest on the money, which will be ultimately returned to them. An important difference, of course, is that money lodged under the deferred maintenance scheme represents capital, whereas under the British scheme the money represents taxation on income.

I One advantage of the scheme announced by Mr. Nordmeyer is the beneficial effect it will have on stabilisation. Those who come under it will be encouraged to defer, as far as is possible, carrying out maintenance work at a time when there is a shortage of labour and when costs of both labour and materials are high. The money that would have been used on maintenance will be withdrawn from circulation at least temporarily and will thus relieve the pressure which surplus money, exerts. It will become available at a time when it will.be possible for business undertakings and farmers to carry out essential maintenance and renewals of plant. The plan is both a simple act of justice and a valuable check to undesirable economic trends, and as such should commend itself both to those who will directly benefit and to the public generally.