TAXATION.

Otago Daily Times, Issue 19257, 22 August 1924, Page 9

TAXATION.

HOYAL COMMISSION’S 11EPOHT. Slit PETER BARR’S VIEWS. At last night’s meeting of the Dunedin Chamber of Commerce the president (Sir P. Barr), in referring to taxation, said it was most satisfactory that the report issued by the Royal Commission on the subject of land ami income taxation on Slay 30 last should contain so many recommendations which had been constantly advocated by this and other chambers, and to some of them it was particularly gratifying that the recommendation referred to in the report as regards taxation of the profits of companies should in effect support the majority report submitted by the Committee on Taxation in 15)22. The committoe expressed the opinion that "the country should adopt I lie individual system of taxation. taxing companies on their individual profits only," and while recognising the difficulty of making the change at once, strongly recommended “that the finances of the country should from now onward be planned so as to make possible the introduction of this very necessary reform at the earliest date practicable. ’ The recent Royal Commission arrived ar practically the same conclusion —viz., that "the present system of graduating the income of each company as a separate income, and charging tax accordingly, is not in accordance with the true principle of a graduated income tax,’ ’which graduated system It regarded as “sound in principle and necessary in practice.” The report then recommended that legislation be passed instructing and empowering the Commissioner of Taxes to obtain and compile data as to the total income of individuals from all sources, with a view to a careful consideration of a complete change from that system to one of taxing every individual upon his total income. The report was signed by all members of the Commission, and tin sreeommeudation was the morn impressive when it was notea that three of the members were aiso ov. the 1922 committee, and that of these two signed the minority report which gave “reasons against the alteration of the incidence of income tax from companies to individuals.” It was also significant that while in the 1922 report very full reasons are given in support of the divergent views no reasons were attached to the conclusions and recommendations of the recent Royal Commission.

Other recommendations of the Commission were almost exactly oil the lines of resolutions passed at lust year’s conference in Auckland and at different times by this chamber —viz., that the differentia-' tion in tax on income derived from different sources such as mortgages and debentures should be abolished, as also the application of the graduated land tax to city properties used for business purposes, and that all State and public body trading concerns should lie subject to the same taxation as private • uterprise*. Two com o ai>, might reasonably be drawn as to the report : (1) 'lbat it was unanimous, and based up i the evidence submitted, rem ibering particularly that the chairman v, as a distinguished expert in the weighing of evidence; and (2) tUat the Finance Minister, even if he did not accept the conclusions, nould find it very difficult not to act upon opinions twice expressed by bodies sot up to take evidence and consider the question. Mr Massey had not been quite right when ho had spoken of the 1922 committee as being “self-appointed.” Although •■the members were nominated by the chambers ol commerce and otner bodies, the committee was appointed by, and its report addressed to, the Prime Minister. But even if this were not so, the Royal Commission was set up by the Government alone, and in its capacity and lit ness tho Minister of Finance hud, with good reason, expressed the utmost confidence. It was particularly noteworthy that stress was laid in all reports upon the necessity for a reduction in the weight of taxation. Iho committee in 1922 regarded it as '‘essential” that the maximum rate should be reduced to 5s in the £. The Chambers of Commerce Conference in Auckland in 1823 urged the Government to reduce the maximum income tax to 4s in the £, and Use commission this year arrived at the conclusion that “it is essential in the interests of the future prosperity of the dominion that the weight of taxation should be reduced as rapidly as possible,” and to “a level that will not cause an outflow of capital from New Zealand.” The conundrum now was: What would Mr Massey do? The business community was hopefully waiting for his decision, buoyed up by his repeatedly expressed opinion that further reduction' of taxation was necessary in the interests of tho country, but tinged with a shade of anxiety owing to tho very cautious statement in the Budget that “in pursuance of the Government's policy of gradually reducing taxation as conditions permit," Parliament would lie asked “to approve of further remissions.’ The country had borne the heavy war burden long and patiently, and was now justified in expecting substantia! relief, not merely from tile direct weight, of taxation, but from its depressing effect upon trade and its influence upon the cost of living. The chamber had expressed no opinion on the question of land tax except as affecting city business premises, but tho commission in this matter again agreed with the, report of the 1922 committee, and advised that tne present graduated land tax should bo abolished and tax leviec) on the income from land. He quite recognised that in this matter there was room for ditteror.ee of opinion, but believed tho recommendation to be sound, in that it meant treating alike all income from whatever source, and more particularly because it removed what was at present an undoubted hindrance *o the taking up and profitable working of land, more especially in largo areas of low-grade country, and the taxation ot owners in the earlier and unprofitable years before the properly became profit-earning. In many cases the burden of land tax, added to that of local rotes, became too heavy to bo borne. On the other hand, it was exceedingly difficult to assess accurately the actual income of the tarmei, particularly when confined to annual periods, and the division between capital and income was a frequent cause of difference of opinion. It had been suggested, and might be worth consideration, that the solution of these difficulties would be found in something like an arbitrary assessment of tho farmer’s taxable income at a reasonable percentage on the unimproved value of his land, which would not interfere with the graduation of his whole income from inis and other sources.