TAXATION

Nelson Evening Mail, Volume LXVI, 11 February 1933, Page 4

TAXATION

EFFECT ON GOLD MINING -j. ' T ' POSSIBLE HINDRANCE TO REVIVAL “It is inevitable that the Government should explore every possible avenue in its search for revenue, but it is unfortunate that it has been considered necessary to tax an industry which is slowly reviving after a long period of stagnation. A much more equitable system of taxing gold mining could have been found.” This was the comment of a director of several gold mining companies, who was interviewed by a representative of the Christchurch “Press”. “There are many companies on ‘the bread line’ to-day and the increased price of gold due to the rise in the exchange rate would have helped them to have continuted successfully,” he continued. “It cannot be claimed that the tax will be fatal to these ventures, but it would have been much fairer if the revenue, so anxiously sought, had been secured bv adidtional taxation on the dividends "of companies. Possibly that course was not adopted because there Was a probability of a degree of evasion There will be no evasion of the export tax but it is a regrettable action at a time when there is much interest in mining.

POSSIBLE EFFECT ON PUBLIC

SUPPORT

“Development is dependent entirely on the voluntary contributions of the people as a whole. If that fount should dry up to a small extent only the result will bo a steadying in the development of proved gold bearing areas, for which only capital is needed. “Another aspect is that there arc many propositions in New Zealand requiring more capital than can be found in the Dominion. They can be developed only with the assistance of capital from overseas and the principle of a tax on gold—not adopted in any other country —is likely to restrict such a flow. As a matter of fact some mouths ago an English company was investigating propositions with a view to their development. A rumour at the time from very high quarters caused the company’s representative in New Zealand to cable his principals not to do anything. “It is just possible, as the Government has shown a very commendable desire to help the mining industry, that this exaction will be refunded again in the way of subsidies and loans to legitimate enterpirses. If such _ was the case there could be no complaint.

ESTIMATED REVENUE REASONABLE

“It should not be overlooked that during the Great War when the costs of production increased enormously and the efficiency of mine workers decreased proportionately, an arrangement was made between the Government and the Imperial authorities that all gold produced should be handed over at £4 an ounce, while the price in the open market was £6 an ounce. That gave the industry a knock-out blow from which the high price of gold and the assistance of the rise in the exchange rate were causing revival. “The increase of 15 per cent in the exchange rate resulted in an advance an ounce of about 17s to 18s so that this tax still leaves something of the benefit for the producer. The Government’s estimate of the revenue to be derived from the tax appears to be sound as a similar tax on production last year would have brought in £125,000. It is reasonable that the increase in production will bring the total to £140,000,” he concluded.