LOAN PROCEDURE

Manawatu Standard, Volume LX, Issue 257, 27 September 1940, Page 6

LOAN PROCEDURE

COMPULSION CRITICISED.

HARDSHIP foreseen

WELLINGTON, Sept. 27. “There is no misnomer in the term compulsory as applied to the war loan, said Mr Andrew Hamilton chairman 3 the Wellington Stock Exchange and president of the Stock Exchange Association of New Zealand yesterday. A particular class of taxpayer has again singled out and is compelled to mike application. Admittedly he may apply voluntarily for more .but ho is under compulsion for a certain amount if there is any. practical meaning to the statements in the prospectus “An unnecessary amount ot difficult calculation has been passed on to taxpayers in that they are obliged to add to their taxable income certain other forms of tax-free income and then endeavour to calculate the amount of Lx that would have been. payabic mi this total. Many people will ha\ c difficulty in deciding what higher rate ot tax they would fall under in this increased amount. . . , “The compulsory subscription has hepn based on the income-tax lor the year ended March 31 1939, a year when manv traders and business concerns would show profits they have not been able to make since the war and since further import restrictions have increasingly reduced their earning capacity. It is more than like.'that many will not have the. available cash and may have to sacrifice some other form-of asset, or appeal to their bankers. How the banks will be able to assist is difficult to conjecture as the loan is almost certain to be at a heavy discount, and will not be easily valued, due to the first three years carrying no interest. NEGLIGIBLE SAVING.

“One obvious result of the compulsory subscription with no return must be a tendency toward further private unemployment through reduced income. The amount to be saved in annual interest on the anticipated amount to be subscribed, £8,000,000, is only £-00,000, a sum negligible in comparison with the hardship and other results to bo nroduced With internal State expenditure of somewhere about £20,000,000 annually on public works many ot which could. have waited t>ili alter tlio war, this saving is a very small amount and could have been achiei ed by an almost unnoticeable economy in such expenditure. “The people of this as a whole are well imbued with the Empire spirit, and unless this form of loan is a political beau geste to certain elements in the country it is hard to understand why a voluntary appeal was not made first. In no other part or the Empire has such a loan been brought forward. At this stage of the war the country might have been given an opportunity of responding to a well-handled financial appeal and the pressure pump withheld till the i oiuntary well was running low. “Another question being asked by many is what provision has been made for cases of hardship, and, finally, what is the position of soldiers overseas whose incomes before they left the country were such as to bring the in within the terms of the prospectus? Are they obliged to contribute to this loan as well as offer their lives?