TAXATION IN AUSTRALIA

Southland Times, Issue 20226, 11 July 1927, Page 10

TAXATION IN AUSTRALIA

THE COMPANIES’ IMPOST. The special tax on companies resorted to by both Federal and State Governments is one of the most oppressive of any, says a Sydney paper. It is oppressive because it is, to an increasing extent, an impost on the savings of tens of thousands of people. It is oppressive in another way. It goes up in New South Wales to 4s in the £. This is a crippling tax, which is bound to discourage, and is actively discouraging, the investment of money in commercial and business enterprises. In that way it is making it more difficult to cope with unemployment. It is a tax on the commercial growth and prosperity of New South Wales. “Our firm alone,” said the representative of a prominent firm of sharebrokers, “has been asked to arrange for the transfer of £lOO,OOO of capital to Victoria, or to the Malay States. That is one effect of the heavy State tax on companies. Only last week a man who had made his money in Australia asked me for advice about investing £26,000 in a tin-mining company, with headquartres to be fixed in the Malay States. “That means,” he commented, “Australian capital going out of the State because of the discouragement of this special form of taxation.” The head of another Pitt Street firm observed that, as far as the older Sydney companies were concerned, they had practically to grin and bear it. Expenses of removal would be too costly. But it was unquestionable that the State tax was a big blow at new propositions. WORKERS SUFFER. The practice of men with small capital—working men especially—investing their savings in companies has been a marked 1 feature of recent years. There are tens of thousands of investors in gas, mining, manufacturing, trading, and building concerns. Before they can receive dividends the two Governments—State and Federal—swoop down on them with a demand for 4s of every £ the company earns. The State Government takes 3s and the Federal Government the other Is. For the last financial year the Commonwealth took from the shareholders of 7800 Australian companies close upon three million pounds —in exact figures, £2,963,349. The State receipts from companies are not set out separately, but are included in the income tax return of £4,661,000. As the State rate is three times heavier than the Federal one, it is a fair surmise that the shareholders in New South Wales are contributing to the State Government over £2,000,000 annually. This form of taxation is often passed over lightly. The “man in the street” assumes, and is encouraged to assume, that only rich people are paying it. The fact is that it is a tax on the savings of everyone who is trying to make provision for his or her old age. The Federal authority, with its abounding revenues, and its £3,000,000 annual surplus, might well take its hand off this form of revenue raising, or at least adjust the incidence. The men who get large sums in dividends have still to pay income tax—even if the companies paid nothing, they would pay on every pound of their income. The oppressive phase of the tax is that it means double taxation on people of small means, while by putting millions into the hands of Federal and State Treasurers, it is a further incentive to unprofitable political spending.