BURNED BANKNOTES.

New Zealand Herald, Volume LXIX, Issue 21232, 12 July 1932, Page 6

BURNED BANKNOTES.

U N o PROFIT TO BANKS."

NAPIER STATEMENT RESENTED. The statement made at a recent meeting of the Napier Business Property Owners' Association "that the banks did well out of the notes that were burned" at the time of the earthquake, is contradicted in banking circles in Napier. A banker last week advanced facts to refute such a statement, which, he said, voiced an opinion which was no doubt widely held.

The banker stated that the annual bank note tax was £4 10s per cent., the income tax on the liability "notes in circulation" was 7s 5d per cent., the income tax on the assets "gold and Government securities" required by law as a backing for the note issue was 7s 5d per cent., and the cost of note forms and administration charges was estimated to be at least £1 per cent., making a total of £6 4s lOd per cent. Ho said that the banks in New Zealand paid income tax on average assets and liabilities. "In the absence of tangible evidence to the bank that notes have been destroyed or burned they are still on the bank's records as being in circulation, and are thus subject to taxation," the banker stated. "It will therefore be readily understood that the banks do not make a profit on these notes as popularly supposed."