COMPANY TAXATION

New Zealand Herald, Volume LIX, Issue 18278, 20 December 1922, Page 8

COMPANY TAXATION

The inhibitive effect upon new business enterprises exerted by the New s'ealand system of company taxation has been attacked again and again. Specific instances have been given showing how companies have been dissuaded from commencing operations in the Dominion because of the exorbitant levy which the State would make upon their incomes. Further striking evidence is afforded by an interview with an Australian visitor, published to-day. Here again it is not a question of theorising about the bad effect of the high rates. Concrete testimony is given that badly-needed capital, which might have brought a great accession to the prosperity of New Zealand, was frightened away. A high protective tariff existing on manufactured goods should encourage investment within New Zealand. The burden of income tax on companies nullifies the effect. In the end, it means simply that New Zealand offers the overseas investor something with the one hand and holds

! the other in readiness to take away even more. Other things being equal, this Dominion would offer a field for investment as attractive as any part of the Empire. Conditions are not equal, for in no other British country is the company assessed on its undivided profits so as generally to bring its income into the highest category under the schedule. In Australia it is not done ; in Britain it is not done. Tho New Zealand Labour Party has protested against a reduction of the income tax. The opinions published to-day show how unsound is that attitude. The expansion of industry, with increased avenues for employment, and an enhancement of general prosperity are all being delayed by high taxation. The reduction this year from a maximum of 8s 9d to 7s 4d in the pound is admittedly too small to make the Dominion an attractive field for investment on any considerable scale. Five shillings as the highest rate would not be a light impost in the circumstances which govern the assessment on companies. Yet it would improve the position materially. One of the paramount needs of the day is a clear-cut declaration indicating when such a measure of relief may be anticipated. With it, there could occur an expansion of industry proving beyond doubt that lower rates and increased returns could very easily go together.