TAXATION

Otago Witness, Issue 3556, 9 May 1922, Page 30

TAXATION

COMMITTEE TO INQUIRE AND REPORT. COMMITTEE TO MEET IN WELLINGTON ON MONDAY. WELLINGTON, May 2. Some time ago the Prime Minister hinted that it would be a good plan to appoint a committee of inquiry of experienced men, representative of various interests in the dominion, to inquire into the incidence of taxation with a view to expressing opinions and suggesting amendments that might be necessary. Certain names were suggested by the Chambers o-f Commerce, the Farmers’ Union, the Sheepowners and Farmers’ Federation, and the Legal and Accountants’ Associations, and the result is that the following committee has now been appointed : Representing the Chambers of Commerce —Mr Walter Gow, hardware merchant, Dunedin; Mr W. D. Hunt, of Messrs Wright, Stephenson, and Co., Wellington; Mr George Shirtdiffe, merchant, Wellington; Mr Peter Barr, accountant, Dungdin. Representing the Farmers’ Union- —Mr Ewen A. Campbell, Wanganui; Mr A. Leigh Hunt, Wellington; Mr J. Bitchener. M.P., South Canterbury-. Representing the Sheepowners and Farmers’ Federation —Mr W. Barton, Featherston; Mr Norman Campbell, North Canterbury. , Representing the Legal and Accountants Associations—Mr T. Shailer Westcn, barrister, Wellington; Mr E. W. Hunt, accountant, Wellington. The committee will hold its first meeting at Wellington on Monday, Bth inst.., at 10 a.m., when it wilt be prepared to hear evidence. Its proceedings will be officially reported. VIEWS OF MR J. T. MARTIN. UNSOUND FINANCING. (Fbov Oub Own Ogkrespondent.) WELLINGTON, May 5. The greatest hindrance to progress and the resumption of heavy trading, said the president of the Wellington Chamber of Commerce (Mr J. T. Martin) to-day. “Members,” he said, “ will recollect that this chamber, in common with other chambers, has continually pressed the Government for a readjustment of our taxation. Resolutions have been passed asking the Government to set up an expert committee of business men to investigate the sources of taxation, and propose a more equitable system than that in vogue. The committee lias now } been set up, and I hope it will succeed in bringing clearly before the Government the many disabilities under which we are labouring. Our taxation is the highest of any of the British dominions, as the following figures will clearly show. Taxation per head of population: Commonwealth of Australia and all State Governments. —In 1914. £4 14s; 1918, £7; 1921, £l3 Os 7d per head. New Zealand (excluding Maoris). —In 1914, £5 10s ; 1918, £ll 3s 9d; 1921, £lB 11s Id per head. South Africa. —In 1921, £8 4s 9d per head. Canada. In 1921, £5 per head. New Zealand revenue from taxation for 1920-1921 is as follows: — I Customs -~^_£~8 : 4Q5;726' Stamp aiid dga-tif duties 3,745,902 Beer duty 360,525 Registration and other fees ... 220,985 Total £14,424,036 Income tax £8,248,945 Therefore the whole population of Now Zealand, which at the September quarter of 1921, was 1,228,833, provided £14,424,036, w-hile 44,597 income taxpayers provided the sum of £8,248,945, of which some companies provided nearly £5.000,000. The figures I have quoted,” added Mr Martin, “show that our present taxation, particularly in its oppressive application to companies, restricts the natural flow of capital, prevents the accumulation of funds for increased industry', imposes a barrier on legitimate enterprise, and removes that stimulus for success which is surely always needful in every business and calling. It is an uneven game, in which one parry—the Government —takes practically half the profits, and never shares in any of the loss, demands its share at the end of the financial period, and leaves the other party with all the risks and responsibilities of carrying stocks. The partnership is a bad one, and will always bo unsatisfactory so long as the sleeping partner—tho Government —exacts unfair advantages from the other party. Money, in the general acc-entanoe of that word, becomes in the hands of companies, financial institutions, and individuals exceedingly more reproductive than in the hands of the Government. If unfettered by heavy taxation, and accorded reasonable opportunities for successful working, capital will flow' in freely to institutions connected with the development of farming and city industries, but imine diately those institutions become hampered in their operations, and obliged to pay away half their profits to the Government, capital, which is always peculiarly sensitive to outside controlling influences, will quickly disappear and seek ether channels where if is better appreciated and cared for. How then are wo to reduce taxation? Certainly not along the lines of increased borrowing, no matter how favourable the borrowing conditions of rates of interest. The interest alone to-day on our national debt, together W'ith pensions and allow'ances, is over £11,000.000. and the last £5.000,000 will increase it by over a quarter of a million annually. This is nearly equal to our pre-war revenue from all sources, the revenue for 1914 being £12.229,661. No, the solution lies in a heavy reduction of Government expenses and increased production of our primary

and manufactured products. It is frankly admitted that the Prime Minister is working hard to reduce the Government expanses, and deserves the thanks of this country for what he has already achieved, but I am confident he must go a great deal further before a reasonable return for the capital involved in all the State departments. It is our duty as citizens to insist that the Government should reduce the expenditure to the utmost limit, consistent with its obligations and the supply of indispensable services. Our revenue in four years has increased 89 per cent., while our expenditure has increased 100 per cent., the figures being;—

Mr Martin also observed that the experience of Ihe past 18 months has shown us that this country is struggling under an enormous amount of loan money. That financing ha? been altogether too flexible, and that credit has been given to an almost unlimited extent. It would appear as if merchants, bankers, stock and station agents, financiers, and ethers who have been working away quietly, each in his own domain, for the past 12 months, puzzling over the effects of the fall in prices of our produce, and wondering why in so short a period so many should loss the fruits of years of industry, and are suddenly awakened to the fact that it was largely attributed to our system cf financing on small margins: In 1914 the total amount outstanding in mortgages in New Zealand was £100,442,297, and in March this year it had reached the enormous total of £229,805,724. In the last 11 months alone we registered £32,531,566, and discharged _pnly £12,328,987. In other words, we increased our mortgages by £20,202,579. In Victoria, in the year 1920, they registered 'in mortgages and released £14.697,097. In the United States a census of farm property in 1920 shows that out of £3,535,631 farms 2,074,325 are free from mortgages; that land and buildings valued at 13,775,500,013 dollars carry only 4,003,767.892 dollars in mortgages. There is probably no country in the world where farmers. - station owners, and others have been able to finance big undertakings on go little paid-up capital as in New' Zealand, but this reckless financing has come to an end, and in future mercantile companies and financiers will exact a greater margin of security on advances than ever they have done in the past.

Year. Revenue. Expenditure. 1916-1917 ... ... £18.367,547 £14,058.770 1920-1921 ... ... £34,260,962 £28,068,730