BANKS AND TAXATION

Sun (Auckland), Volume IV, Issue 1077, 15 September 1930, Page 11

BANKS AND TAXATION

A DANGEROUS EXPEDIENT AGGRAVATING THE DEPRESSION (Contributed.) The view held by some of our politicians, when it comes to imposing new taxation, that a bank is a kind of inexhaustible Waihi mine, is just about as dangerous as the popular idea that the owner of a landed estate is fair gumo for plunder. At a time when the Government is trying to lay its hands on money to fill the deficit in the national finances, caused by its own folly and extravagance, any institution or business which carries on operations on a large scale looks good from the tax-collec-tor’s point of view, and banks, like squatters, have few friends in the Labour Party, which has such a large say in the policy of Mr. Forbes’s Government. Hence the massed attack by a Parliamentary deputation to Mr. Ransom on Friday, which voiced objections to the action of the banks in restricting an issue of 10s notes which is no longer profitable, and in doubling the charge for keeping accounts. The deputation, either through ignorance or by intent, shut its eyes to the fact that a bank is an ordinary trading concern which has the same rights as any other taxpayer and cannot, in equity, be asked to make a larger proportionate contribution to the Treasury than s any other big corporation. The writer has no brief for the banks. Tie lias been a consistent borrower from them, and like any other ! business man would prefer lower inj tcrest rates and normal exchange; I but he feels it desirable to point out [ that the capital and reserves of the i banks are the chief bulwark between j the mercantile community and an I economic crash which would involve widespread liquidations and still greater unemployment among the

constituents of those politicians who think they are increasing their popularity by attacking the banks. These institutions, with all their faults, are already paying a larger proportion of their profits away in taxation than other concerns, and to. impose on them fresli burdens is merely | restricting their power to finance their j clients at a time when nearly every- ! ono in business requires extended j credit. Any further raid on banking profits must react seriously on busi- j ness, and imperil the jobs of person: 1 whose employers are carrying on under conditions of exceptional difli- ! oulty. In taxation, and dividends on its shares, the Government alreadx ! gets half the net earnings of the Bank I of New Zealand. In taxation on turn- I over and landed property, it gets ! roughly one-third ol' the profits of the i other banks operating in New Zealand. 1 If it got the lot it would be far fron I sufficient to make up the deficit in I tlio national accounts which Mr. Forbes anticipated before he brought i down his Budget. Tlioi*e politicians who have exaggerated ideas regarding the ability of the banks to stand ! taxation ought to be able to see that ! the banks’ customers must always pay i in the long run. and that the bank is merely the agent which collects the i money from the business community and hands it to the Government to j squander. The idea that banking Is a business that makes money in vast sums automatically is merely stupid. 1C it were jso easy, how is it that in a field which • is open to the world, only one bankj ing corporation has found it sufficiently j attractive in the last 40 years to exi tend its operations to New Zealand? jln the interim, investors have subi scribed enough money for picture ; i theatres and motor-car businesses to start half a dozen banks. The note issue, which has a fatal J fascination for politicians, could be taken over by the Government easily ! enough, and they would get less out of it than they are now charging the banks for the privilege. "While they aro at it, they might just as well take advantage of the depreciated price of the shares, and buy out the shareholders in the Bank of New Zealand. Tlio Government would then have a j iStuto bank and a monopoly of the ' note issue. They would not be as well oft' as they are at present, but they would perhaps satisfy that section of the community which sees virtues in State banking which have never existed save in the imagination • of cranks. But the business community is vitally interested in fresh taxation schemes for balancing the Budget, instead of cutting down public expenditure on luxuries and unprofitable railways and other public works. The new taxation is merely withdrawing money from productive enterprise to spend on non-productive schemes which have never produced anything | but a deficit. The effect is merely to i aggravate the depression by curtailing tho power to employ labour and develop wealth-producing activities. The most depressing feature of the outlook is the inability of the politicians to do anything useful or help- ! ful in the critical situation which has j arisen. P.S. j NEW HARVESTER TORONTO, Saturday. j The construction of the new plant j for tho manufacture of the Sunshine reaper and binder is progressing satis- ! factorily at Waterloo, Ontario, accord- j ing to an official of the Waterloo Manu- | factoring Company, which is jointly interested in the project with the McKay Company. It is anticipated that production will be begun before the end of 1930. In the meantime machines for sale in North and South America are being assembled at the plant of tho Waterloo Manufacturing Company, from parts imported from Australia. It is understood that the capital of the new company which will be formed will be about £5,000,000. No public issue of stock is contemplated. TE AROHA DAIRYING The first monthly advance payment of the newly-formed Te Aroha-Thames Valley Co-operative Dairy Company, Limited, will be made to suppliers tomorrow. For butter-fat supplied in August the rate will be Is Ojfd a , lb with free transportation. The old Te Aroha Dairy Company, Limited, will shortly declare an interim bonus payment issue, bringing the returns for February, March and April up to Is Old a lb, and making the last season’s average approximately Is 3 1-Sd a lb. COMPANY REGISTRATIONS The following private company has been registered in Auckland: Phillips and Smith, Ltd., brass founders and finishers, plumbers, etc. Capital, £4,000 in £1 shares. Subscribers: J. Phillips, 3,000 shares; J. F. Phillips, 1,000 shares. SLUMP IN JUTE Reed. 10.35 a.m. DELHI, Sunday. , Bengal faces a serious financial position owing- to the fall in the price of -lute, which it is estimated will mean a diminution to the extent of 40 crates .(400,00.0,000) rupees.