THE DUTY ON CHEQUES.

New Zealand Herald, Volume LXIV, Issue 19691, 18 July 1927, Page 12

THE DUTY ON CHEQUES.

Sir, —I presume New Zealand hankers would heartily approve their English colleagues' arguments in favour of a reduction of the duty on cheques as a means of increasing small accounts and the use of cheques so that deposits would expand and currency circulation contract. But I do not anticipate much enthusiasm toward the idea from the Minister of Finance. The banks frankly admit that they would profit bv the adoption of their proposals. They would gain through the reduction of the note taxation and still more by the anticipated expansion of deposits enabling them to increase their advances. It -locs not seem to have occurred to the advocates of a penny duty on cheques that they might more easily attract the small accounts by themselves offering some concessions that would cost only a fraction of the anticipated profits. Why should the banks not propose to the Treasury that if the duty is reduced, they wiil undertake to make up any deficiency in the receipts? Or if that is too undertake to pay the duty on cheques under, say, £2. We have" had recently formal complaints that the savings banks compete with the commercial banks for small deposits, the suggestion being that the former are enabled to do so by their exemption from income tax. But they pay a great deal more in interest on deposits at call than would be required to meet income tax, and they offer depositors all the usual facilities except the use of cheques and do not make the charge of 10s a year for keeping accounts. If the banks are sincere in their professions of solicitude for their customers, present and potential, there are other directions in which they might give practical evidence of it without asking the Government to stand the expense. Is it really necessary to charge exchange on inland cheques ? Is it really necessary that a customer drawing cash froin his own account should write a cheque and pay duty ? We have been assured that the only reason for the recent, increase in rates was to attract- deposits. The Midland Bank, in England, has gained great applause for its ingenuity in breaking awav from the humdrum conventions of banking. JLs there sufficient initiative among our !New Zealand bankers to adopt somp attraction for current account denosits' I do not suggest interest on balances That would completely upset the" equilibrium. , Small Account