INTEREST AND TAXATION

New Zealand Herald, Volume LXXIII, Issue 22517, 7 September 1936, Page 10

INTEREST AND TAXATION

SAVINGS BANK'S ATTITUDE MORE COMMENTS BY MR. NASH [BY TELEGRAPH —SPECIAL REPORTER] WELLINGTON, Sunday ifie action of tho Auckland Savings Bank in refusing a loan to the Thariies Valley Electric-Power Board was the subject of further comment by tho Minister of Finance, the Hon. W. Nash, in, a statement issued yesterday. Mr. Nash referred to his earlier statement published yesterday, that the trustees of the bank were withholding £1,000,000 from investment. Tho actual sum of cash in hand and at bankers on March 81, 193G, was £1,210,100. as against the statutory proportion of one-tenth of its total funds, which must bo kept liquid, but which could bo invested in war loans and fixed deposits. Tho actual sum required to comply with tho provisions of tho law was £48(5,115, so that the sum held and not invested would bo jnore • correctly stated at nearly £750,000 and not £1,000,000. : "There are other facts which can be stressed here," Mi'- Nash continued. "The net > profit of the bank last year was £51,843, and yet tho trustees complain in tho annual report against having to pay a proportion of this in income tax. They also protest that a limitation of interest on deposits to 3 per cent is a penalty on thrift. My statement last evening originated in a refusal ol tho bank to grant a loan to tho Thames Valley Electric-Powor Board-and affirming as its reason that tho proposed increase in income tax is such that local body loans at 3J per cent cannot bo considered satisfactory. "This procedure is completely opposed to the Government's policy of keeping interest rates at lower levels. If interest rates are to soar' as they have on previous occasions the return of the 'slump period is inevitable. Investments should bo safeguarded, but national development cannot be continued on sound lines if investment i organisations of a social nature utilise j their powers to drive interest rates to i iosh levels." J