TAXATION PROPOSALS

Otago Daily Times, Issue 18049, 24 September 1920, Page 3

TAXATION PROPOSALS

BTUNTCIPAII TRADING CONCERNS.

STRONG OPPOSITION.

MAYOR OF DUNEDESTS OBJECTIONS.

(Pek United Pbess Association.) WELIiNGTON, September 22. Strong opposition to tho Government's proposal to tax ita.unicipa.l trading concerns was expressed at a meeting of tho executive of the Municipal Association, hold in Parliamentary Buildings this afternoon. Mr J. P. Luke, M.P. (Mayor of Wellington), presided, and there were also present Dr Thacker, M.P. (Mayor of Christchurch), Messrs W. Bejrsr (Mayor of Dunedin), E. P. Rish worth (Mayor of Lower Hutt), J. A. Nash, M.P. (Mayor of Palmerston North), T. K. Sidey, ALP. (Dunedin), R. A. Wright, M.P. (Wellington), and T. F. Martin (solicitor to Municipal Association. Mr Luko said that olauso 23 of the Land and Income Tax Amondment Bill was a provision which brought the municipal trading ooncerns into line with private com--1 paruos, so far as taxation was concerned. He contended that municipalities should rot have to pay taxes on their trading concerns. because such services wero run solely in the interests of the peoplo. No special privileges were oonforrod upon anybody in respect to these concerns, and the responsibilities of local bodies were that they should crivo the services at a minimum cost. Not one of the municipalities was out for profit, and what profits were made from its services would go back into tho undertakings for the purpose of effecting improvements. If the municipal authorities were to bo taxed simply becauso their concerns competed with thoso of private companies, then, he said most emphatically, that there would be very little encouragement to local bodies to establish trading services at all. If it wore right to tax tramways, olectric light, water, or milk supply underakings, then clearly it was proper to tax post offi/ces and railways as well. —(Hear, hear.) He believed that strong representations should bo made to tho Government on behalf of the municipalities, pointing out that the proposed legislation was a very retrograde step,. Such taxation would be burdensome, and would have the effect of raising the charges on the people. It was most _ important that they should be very solid in' their opposition to the Bill. To his mind there was a difference between a municipal electric light concern and a private gas company. Mi' Nash: Ono is making profit far the few. Mr Luko: "Exactly." Hie two services were different. As a medium for providing light gas was a vanishing element. It was being superseded by electric light, but for cooking and heating the use of gas was increasing. The present was the most inopportune time (if it was ever opportune at all) for bringing down such taxation proposals. He knew that the Government must have money, but he did not think it right that such money should be raised by- taxing the trading or industrial concerns of local authorities. Mr Luko moved— "That members of the executive wait on the Prime Minister and stress that the proposal to tax local bodies' debentures and undertakings is inimical to the best interests of the people of the dominion, and respectfully urges the Government to delete the proposals from the Bill." Mr Martin said the effect of the Bill was to place debentures of local bodies on the same footing aa debentures of cornpanics, and a tax of 3s in tho pound was to be paid on them. The Government would collect the tax direct from the local body, which would deduct the amount of tho tax "when it paid the coupons. The debenture tax "was to bo paid on coupons honoured in London. 'Mr Massey had stated that that was not intended, but as the speaker read the Bill that was tho effect of the proposal. To tax debentures placed hardship on small investors because a large number of debentures wero taken up by people with small means. Mr Begg remarked that the Bill was likely to hit Dunedin pretty hard. Tho municipality there was not in open competition with anyone in its trading concorns, and tho residents ' were being supplied with services more cheaply ihnn i n any other part of tho dominion. Based on last years figures, the income tax that Dunedin City Council would harvo to pay, exclusive of renewal fund and depreciation, would bo something like £21,000 It was quite right that a private company engaged in similar services should have to pay such tax, but under the present conditions the ratepayers and the general public were getting tho "wholo of that money back. "Wo won't oppose the tax if the Government will let us tax all their property," added Mr Begg. He maintained that tho Government departments were not entering into fair competition with local bodies. The Dunedin City Council tried to get some hydro-electrical machinery imported free of "duty, but without success Regarding tho suggested payment of income tlx on debentures, Mr Begg said that his council had been negotiating for a renewal of £100,0C0, at 5j per cent, but tho effect of th° proposed tax would be that tho couu- ■ oil would nave to pay 62 per cent. Dr Thacker said that the Government should be compelled to pay rates on its departmental buildings. Mr Rishworth said the proposals of the Government simply meant that the finance of local bodies would bo crippled. The rate of interest •would, become so high that anything in the way of development work would bo hampered. At present looal bodies were hampered by tho fact thjit all Government property wis exempt from taxation- If tho Bill wero passed as it stood Local authorities would experience seriou.s difficulties xn raising lcfens, as the rate of interest would be affected. Mr Luke stated that the Mayor of Auckland was unablo to attend the meeting, but he had indicated l that ho and his council were entirely opposed to the proposals ■ in the Bill. Tho Mayor of Auckland had expressed die view that if the Government persisted in its -proposals to tax the profits of the trading departments erf looal bodies it should make it clear that only sach profits and not incomo from general rates or water charges should be taxed. Mr Lulce's motion was carried, and it was arranged that the executive should place its views before the Prim® Minister- to-morrow morning