Manawatu Daily Times. (ESTABLISHED 21 MAY, 1876.) FRIDAY, 31 MARCH 1, 1922. TAX ON COMPANIES.

Manawatu Times, Volume XLVI, Issue 2076, 17 March 1922, Page 4

Manawatu Daily Times. (ESTABLISHED 21 MAY, 1876.) FRIDAY, 31 MARCH 1, 1922. TAX ON COMPANIES.

The taxation imposed upon public companies in New Zealand is indefensible. It is convenient, from the point of view of the. tax-gatherer, but it is inequitable because it makes the small shareholder contribute in the same ratio as the large. When the taxation proposals were before Parliament in the last session, several members protested against the injustice of the company tux, but their protestations were of no avail. Relief from the iniquitous imposition would not appear to be possible until the constitution of Parliament is materially altered. It may be interesting to know what is happening in other countries. The income-tax levied on public companies in Denmark was amended during the war, when tiiat country became very rich and companies, especially shipping companies, earned huge profits. Taxation then was very nearly as high as the present maximum rates in New Zealand. Other taxes were also imposed but with the altered conditions now existing, due to the slump, the Government found it necessary to amend the whole system of indirect and direct taxation. In November last a Bill was submitted to Parliament dealing not only with the direct taxation but also with the Customs Tariff, and has since become law. The basis on which companies are taxed is the percentage the profit bears on the paid-up capita 0 !. If the company earns a profit at all, it pays 5 per cent, on such profit. If the profit amounts to G per cent, on the paid-up capital, the tax is 6 per cent, and the tax rises as under:

50 or over . . .. 15 During the debate on these proposals a member put this case to the Minister: —If a company has a paid-up capital of £IOO,OOO and a reserve fund of, say, £200,000, how would the proposed tax affect it? The answer was that the tax would be on the percentage the profit bears to the paid-up capital only.

Profit ob capital per cent. 7 Tax per cent. 7 7 to S 8 S to Ifl 9 10 to 11 10 12 *o 15 .11 15 to 20 12 20 to 30 13 30 to 50 14