TAXATION.

Otago Daily Times, Issue 19282, 20 September 1924, Page 17

TAXATION.

TO THE EDITOR. Sin, —The -writer of your “contributed” articles on taxation is so extreme and uncompromising an opponent of the company tax, and so fervent an advocate for its abolition, that I hope it is not unfair to conclude that the promotion of his aims in that respect originated his desire for a prominent place in your columns. One may further surmise, if it is not presumptuous to do so, that the editorial classification of the particulars ho has so ably and usefully submitted was hot entirely unrelated !to the extreme partisanship on this question exhibited by the treatises he has published. ' The discussion of this question, though it must bo admitted to be becoming a little wearisome to the general reader, is nevertheless still legitimate and important, and I am far from suggesting that your contributor has not a perfect right, in advancing the opinions he evidently has so deeply at heart, to dwell exclusively on the points which appear to tell for his own preference—ignoring or leaving to possible expression by more openminded inquirers like myself, the inevitable consideration on the other side. Kemembering, however, my own allusion just above to recent experiences in regard to the possible over-discussion of this matter, 1 do not intend arraying these latterpoints, and should not even if I were a completely convinced adherent of the present system, which so far is hardly my case. I merely wish to put it respectfully to your contributor that in the tervour of his advocacy of an organic change ho has perhaps permitted himself a little too much of the license claimed by counsel learned in the law as requisite to enable them to serve their client’s cause to the utmost of their forensic powers. We are told by him (and the phrase is, as it is intended to be, distinctly arresting) that “No other country in the world is employing a similar system.” Merely remarking that that phrase is not unfrequently used, in respect to New Zealand legislation, rather as a source of pride than as a reproach (and that not a few would be inclined so to use it in the present connection). 1 would point out that there is a touch of forensic ingenuity in the use of the word “system.” A graduated “system” of company taxation is not in use elsewhere, and, taken literally, the phrase is therefore beyond refutation. But if, as honesty (coupled, perhaps, with the fear of effective disproof) has compelled your correspondent to admit at the tag end of his last article at least one State in Australia (counting in the cumulative Federal income tax) gets at its companies to practically the same extent at the New Zealand Tax Department does at ours, while other States approach the same standard, where does the essential difference come in? The Companies that have to pay (I use your contributor’s figures) 5s 9 3-5 d in Australian income tax are not greatly concerned as to whether the mere official designations of that tax and the New Zealand one are the same or different. But that is not all. A New Zealand company does not pay the maximum of 5s lOd if its profits arc moderate; but a Queensland company must pay that amount (within about a half-penny) if it makes any profit at all, however small that may be; and similarly, the lower figures of the other States are also a flat rate tax on the actual profits, whether small or large. In another week or two the Queensland ordinary and universal company tax will be much higher than the maximum tax possible to be levied on any New Zealand company, even should the latter’s profits bo abnormally large; and far higher still than the New Zealand tax on any company whose profits are on a modest scale. In the latter circumstances, in fact, even other Australian States may exact more proportionally than is levied on our companies. While, therefore, it remains true that “No other country is employing a similar ‘system’ " it is equally clear from your contributor’s own figures that at least one other country, and probably two or three more (all in Australia, our next door neighbour) are harder on their companies in the way of company taxation than New Zealand was last week, and much harder than our country will be in a few days from now. As I have said, I am making no attempt here to marshall the general arguments in favour of the company tax. I am merely pointing out that your correspondent’s zeal for the change ho is advocating has apparently rendered him insensitive to some apparently plain inferences arising from his own figures. —I am, etc., X.