INCOME TAX

New Zealand Times, Volume XLVII, Issue 10963, 27 July 1921, Page 5

INCOME TAX

EXCESSIVE IMPOSITIONS BLOW AT BUSINESS FINANCE AND DEVELOPMENT. HOW CAPITAL IS STIFLED. (Speoial to “Times.”) PALMERSTON N., July 26. Mr W. C. Harrington, F.1.A.N.Z., addressed a Large meeting at the Palmerston North Luncheon Club to-day on business finance and .income tax. He said that the trouble about tho present income tax was that it struck a heavy blow at business finance and development. Many Chambers of Commeroe in New Zealand had included the matter in their programmes, but then discussions tended more to dwell upon the fringe of the subject, rather than the important features which lay at the heart of it. He pointed out that business men with practical experience of tlie ohamgable conditions of trade should be availed of by the Government; business men who were capable of criticising tax proposals, and who were far-seeing enough to expose any injurious effects thereon. POSITION OF DAIRY FACTORIES. Co-operative dairy factories, he said, now came under the provisions of the Act, and were taxed upon the balance of profits set aside in good years, as a nest egg, to meet capital expenditure such as additions, etc., in lean years. The tax, (though reasonably Correct in theory, was not going to assist directors who were pursuing a policy. of prudence. As dairy factories were the manufacturers of a daily necessity Which had to be placed on the marker at the lowest possible cost, they differed from other manufacturing concerns in that they were unable to pass this extra cost on to the consumers. The only possible measure by which dairy companies can free themselves from the tax on reserves is to'divide them among tho shareholders, and eo shift the mat ter from/ its own shoulders on to each individual shareholder. He disapproved of this course by reason of the fact that the division ■of profits up to the hilt was universally regarded as weakening a company’s financial position. CIRCULATING OAT ?AL SHRINKS. Idfeome tax had g ..o up by nearly 280 per cent., and it was taxing the trudnnig community to such an extent that ■ furbher enterprise and the extensive use of' capital -for’ productive purpose® was going to be stifled. In the many circumstances, with the fail in the price of raw material, which falls on the producer, and the slump m the prices of imported goods, which falls on the merchant, and. the high Cost of material and labour which affects tho manufacturers, and the increases in income tax levies imposes suidh a severe blow »(ttoat companies find tcMiay their crrenlating capital gradually shrinking. This is a bad sign, for when circulating capita! gives out a business soon finds itself in difficulties in meeting its engagements as they become due. BLOW AT DEVELOPMENT. The keynote at the present time wae production and development, yet the Government, by disregarding all economic warnings, are striking a blow at that development which is eo essential to the country’s well-ehing. ■ Mr Harrington was accorded a hearty vote of thanks for hi® interesting address.,