TAXATION

New Zealand Times, Volume XLIX, Issue 11296, 23 August 1922, Page 5

TAXATION

A COMPANY’S COMPLAINT ; PROPOSED REDUCTION WOULD BE GREAT BENEFIT. INTEREST CHARGES. In his address to the annual meeting of the Wellington Woollen Manufacturing Company, yesterday, Mr W. H. P. Barber made the following references to taxation: You will notice in the profit and loss account a large sum under the heading rates and taxes, £23,774 9s 8d; in fact, it is the largest that has appeared in any of our statements, it being the first payment at the increased rate of tax, 8s 9d, three-fifths less 5 per cent. A great deal about the “burden of taxation” has appeared recently in the Press, and you can see by the figures before you the real weight we have to carry in that item. I am inclined to think that the public does not sufficiently realise how large a factor excessive income tax on manufacturing companies is in keeping up the high cost of living. If a company like ours, making and selling essential goods, has to make a profit of, say, 10s on a certain line, in order to carry on successfully, then it has to increase the amount by nearly another 10s to meet the present tax taken by tho Government on profits. However, I need not enlarge on the matter, as the Taxation Committee set up by the Government recommends a reduction to ss. If such be adopted, we shall be brought into line with the British rate, and must own that it will be a great benefit; but to indicate the feeling at Home regarding the 5s tax, I wish to quote briefly the opinions of one or two well-known publio men, which apply with at least 60 pier cent, more force to the amount exacted last year in this country. ENGLISH OPINIONS.

The Right Hon. A. J. Balfour (now Earl Baltour), addressing the American Congress, said: “Tne real financial strain which had disastrously affected the industry and commerce In all European countries had been the enormous burden of taxation.”

Sir Eric Geddes, addressing the Sheffield Chamber of Commerce, said: “You cannot get industry going with its load of debt hanging round its neck. It is strangling industry. The only thing that matters is to get down taxation, or we die. To my mind, tse risk that must not he run is the risk of industrial extinction.” The Right Hon. Reginald McKenna (ex-Ohancellor of the Exchequer), speaking to the Bradford Worsted Spinners’ Federation, said: “Notwithstanding recent remissions of taxation (6s to ss), T believe that the remaining burden is heavier than can be borne consistently with the prosperous development of our trade: The present rate of income tax and super tax, apart from its moral effect in disheartening the trader and discouraging enterprise, preventa that growth of capital which is indispensable to all progressive business. The reserve which every good business man aims at building up is eaten into, and the power to provide for future development is lost. I have seen too many balance-sheets not to know the sterilising part which excessive taxation plays.” I have quoted these views because I want to emphasise the fact that they refer to a tax of 5s against 8s 9d)> three-fifths. If Parliament reduces the New Zealand figure to a similar amo&nt it will only then be at a rate described by these eminent statesmen as paralysing to industry. It must be remembered, also, that we have to compete against British producers, who possess many advantages we cannot have with a small population. INTEREST CHARGES. Our interest charges have been high, and tins matter has had the earnest attention of the board, and as it is not anticipated that any large expenditure will arise during the present year, the liability to our bankers will very soon be comparatively negligible, and a substantial reduction will be shown under that heading. The reciprocal tariff just arranged between Australia and New Zealand as affecting the textile and woollen industry, is no doubt as good as tho Hon. the Minister for Customs could secure, and he is entitled to congratulations, but, through an apparent oversight, there wa» ai\ omission which, it is expected, will toll against the clothing and hosiery manufacturers of the Dominion. It has al. ways been recognised that _ made-up goods should have some tariff advantage over raw materials, ancTthe 5 per cent, in the Imperial tariff is considered to he little enough. In the reciprocal tariff, apparel, and hosiery are on the same rate as piece goods, there being no concession to cover the cost of converting the materials into clothing, etc.

Dr C. Prendergaat Knight said he thought the shareholders would take a far greater interest in the subject of taxation if the tax were deducted from their dividend.