TAXATION OF BANKS.

Otago Witness, Issue 3994, 30 September 1930, Page 29

TAXATION OF BANKS.

A REPLY TO CRITICISM.

REASONS FOR INCREASED CHARGES.

WELLINGTON, September 24.

Sir Henry Buckleton, general manager of the Bank of New Zealand, has sent tiie following letter to the Acting Minister of Finance (Mr E. A. Ransom) concerning the banks’ attitude on the increase in the note tax:— “ Sir.—ln view of the statements made by some members regarding the attitude of the banks in not themselves shotildering to the full the increase in the note tax may I by way of correction point out —

“(1) That the banks are for income tax purposes already inequitably taxed on an unscientific and arbitrary basis imposed on no other company, which assumes a fixed profit even though its business might be actually run at a loss. Under this inequitable system this oank alone will pay this year £58,841 over and above the assessment made in the ordinary way wore it merely a limited company.

“(2) 'That the bank has no intention of passing on the increase of 10 per cent, in income tax to which all taxpayers are equal y subjected, notwithstanding the untenable basis of taxation previously referred to. This 10 per cnet. increase amounts to £17,865. “(3) That the increased note tax dates from July 1 last, while the charge for keeping the account dates from October 1 next. The increased tax for this period, which represents to the bank £13.500, is not being passed on. “(4) That we estimate this bank's increase in the note tax will not be less than £54,000 per annum, whereas the number of accounts of the public kept by us liable to the increased charge is under 85,000, representing at 10s, £42,500. “(5) That as this bank is probably doii half the banking business of the Dominion it can reasonably be assumed that the total number of accounts assessable by the combined banks is approximately 170,200, and not the wild conjecture of one member—4oo,ooo. “ May I further state that rather less than one-half of this bank’s profits last year ■were earned inside the Dominion tnd of the New Zealand-earned profit £152,602 was not taxable, being interest on our holdings of ‘ tax free ’ 4J per cent, war bonds. The sum of £33,950 was also exempt from taxation, being the bank’s contribution to the officers’ pension fund and to widows.

“To clarify the position may I ask you to be good enough to take the earliest opportunity of submitting to the House the facts as herein set out, and should honourable members care to question me on the subject generally I am at their service.”