“TOO DRASTIC”

Manawatu Standard, Volume LX, Issue 256, 26 September 1940, Page 8

“TOO DRASTIC”

COMPULSORY LOAN

AUCKLAND CRITICISM

Per Press Association

AUCKLAND, Sept, 26. The war loan terms were condemned as too drastic by the chairman ot tlie Auckland Stock Exchange (Mr J. AV. Frater), wiio said compulsion would have an adverse psychological effect and result in considerable iiardsliip on business and industry. Compulsion had not been tried in any other piart of the Empire so far, and was equally, unnecessary here. Tlie terms were a blow at patriotic incentive, which was strong in New Zealanders' hearts.

The restriction on the death duty clause would have the effect of weakening the market tor the scrip, thus compelling holders who had to sell to accept a loss. He considered a straightout loan at 2} per cent., involving £200,000 yearly in interest, would 'have met with a spiondid response and have obviated a gieat deal or hardship. , “AA r hat has been done is, in effect, to levy a special income tax on those wh<s in February, 1940, paid over £SO of income tax,” said Dr. FI. A. Cunningham, an authority on taxation. It was not merely a loan, because the stock received in exchange, being free of interest for the first three •years and afterwards carrying a low rate, was probably worth little more than half its face value. That represented a serious added burden in the case of many taxpayers, particuUky business people who had been recently assessed unduer the hew provisions relating to valuation of stock-in-trade. He pointed out that- in the ease of previous loans taxpayers could appeal to a specially constituted board of appeal and afterwards to a Judge of the Supreme Court. It was now left to the Minister of Finance to decide whether a person had subscribed in due proportion to lii snieans.