OVERSEAS LOANS

Poverty Bay Herald, Volume LX, Issue 18255, 25 November 1933, Page 12

OVERSEAS LOANS

DEMAND FOR GUARANTEES | ! 'freedom from taxation COMMENT BY .MINISTER j I (Per Press Association.) WELLINGTON, last night. Interviewed to-night in regard to ‘ the cabled information from London to the effect that the London Stock, Exchange market requires all future I colonial local body issues to express ! principal and interest as payable in sterling, and to be free from all) domestic taxation, present and future, tin* Minister of Finance, the lit. Hon. ,T. G. Coates, stated that he regretted . very much that any statement had : been made iu the press in regard to ] the matter. i' “I am in a position to say/’ said *' Mr. Coates, “that cabled information ' was received by the Government this, 1 morning to this effect, and a reply; has been sent, to the High Commis-/ sioner. Briefly, the Government lias ; _ no objection whatever to local body/ issues in London containing an ex- 1 I press provision for the payment of, , principal and interest in sterling in j ‘ London only, and, in fact, the Govern- j meat believes that this is the right t, and proper course for local bodies to i take. I think that lias been made j clear in connection with future loans ( • of local bodies. What the London j ,Stock Exchange apparently now de- j < sires is for bonds in respect of future j ] issues to contain a definite and specific j agreement for payments in London in 1 1 sterling. 1 MATTER FOR LOCAL BODIES

“As to the second question, freedom from domestic taxation present and future,” said Mr. Coates, “the Government can adopt no other attitude but that this is a matter for arrangement between the borrowing local authority and the lender, and any statement in a local body prospectus to the effect that the issue will be free from domestic taxation, present or future, cannot possibly bind present or future Governments. “I consider,” continued Mr. Coates, “that if any local body issues a prospectus that the bonds are to be free of all domestic taxation, present and future, the local body itself must bo responsible for any taxation that may be imposed bv future- Governments, and I desire to stress this point. “I hasten to add,” said Mr. Coates, “that the present Government has no intention of imposing any taxation on this class of bond. The Government: is of opinion that any local body which includes a statement of this nature in its prospectus, thereby logically undertakes to pay any tax which may be levied in future, so that the lender shall get the actual return specified in the contract. As the law stands at present there is no taxation on this class of bond.

“I feel bound to say,” continued Mr. Coates, “that any local body should undoubtedly make it dear that freedom from domestic taxation should inure only for the benefit of holders domiciled beyond the Dominion. ’ ’

Tn concluding, Mr. Coates stated that no announcement had been made to the press in New Zealand by the Government, as it felt that the matter was not one to which any publicity should bo given at this stage, as it would tend to create an altogether false impression, particularly as the negotiations which gave rise to the cable message are incomplete.”