INCREASED COMPANY TAXES

Taranaki Daily News, 25 July 1930, Page 11

INCREASED COMPANY TAXES

INCOME FROM INVESTMENTS. It is also proposed to make some changes in regard, to the taxation of life-insurance companies, the taxation on which has been considerably reduced in recent years. In 1921 it was provided that "the income should be assessed at half the ordinary rate, and the companies have been able to increase greatly the bonuses pai . It is found, however, that the Government Life Insurance Department, the assessable income of which is determined by its actual profits, is paying 32 per cent, of the total income-tax paid by life insurance companies, while its income represents less than 22 per cent, of the total income of life insurance companies. This is a result of the peculiar method of arriving at the assessable income of life insurance companies. Such companies are assessed on income derived from investments in New Zealand and investments out of New Zealand held by or on behalf of the .New Zealand branch. It is not necessary for companies to make inv&stmenus on behalf of any particular branch, consequently they may to a large extent determine their own taxation. It is proposed, therefore, to provide that in the case of foreign life insurance companies the taxable income from life insurance business shall equal 25 per cent, of the premium income and consideration received for annuities. This is approximately the rate shown on an actuarial basis by the Government Life Insurance Department. It is estimated that the yield from land and income tax after these adjustments have been made would be practically the same as under the existing legislation, the only difference being that the burden would be more equitably distributed. In order to obtain part o-f the additional revenue required to balance the Budget, it is proposed to withdraw the land-tax concessions granted in 1924, whereby a deduction of 5 per cent, has been allowed on the amount of landtax otherwise payable. In addition it is proposed to increase the income-tax rates by 10 per cent. TOTALISATOR AND STAMP DUTIES Under the Stamp Duties Act it is proposed to make the following alterations:— (a) Increase the banknote duty from the present rate of 15s to 22s Gel. per cent, on the average amount of notes circulating during each quarter. This increase, which will operate as from July 1, means an increase from 3 per cent, to 4£ ner cent, in the banknote duty. (b) Increase the totalisator duty from 2i per cent, to 5 per cent., the State to receive the whole of the increase. At present the State receives 2J per cent, and the-racing clubs 7J per cent, of the amount deducted by racing clubs from investments on the totalisator. The" proposal is to double the revenue received by the State without interfering with that received .by the clubs. (c) Require insurance companies to pay the usual 2d duty on receipts. At present they enjoy an exemption from this tax. (d) Increase by 10 per cent, the stamp duty on all instruments presented for stamping. Instruments which the parties thereto are permitted or required to affix adhesive stamps or write on stamped paper will not, however, bo affected. (e) Companies’ annual license duty: minimum to be £1 and maximum to be increased from £2OO to £3OO. (f) The exemption from conveyance duty of transfers of land from the Crown to be limited to lands within the meaning of the Land Act, .1924, or Land for Settlement Act, 1925, or Education Reserves Act, 1928. This amendment would still leave free of duty transfers of land from the Crown for land settlement and suchlike purposes, but will require purchasers of land from Government trading departments to pay the usual duty -thereon. (g) Impose duty at the same rate as is payable on the transfer of shares in New Zealand companies upon transfers of shares in foreign companies, including foreign mining companies, executed in New Zealand. At present such transfers escape duty in New Zealand. (h) Increase the flat rate of duty on registration of mortgages and diecharges ’thereof from 2s 6d to ss. (i) Amend the definition of “public authority” so as to exclude the Public Trust Office from benefits in favour of the Crown, and Otherwise narrow the definition of the Crown for purposes o£ stamp duty. (j) Require the Government Life Insurance and State Fire Insurance Departments to pay an annual license fee and receipt and cheque duties at the usual rates. This proposal means placing these departments on the same footing in regard to taxation as other insurance companies. These proposed amendments to the Stamp Duties Act, apart from the increases in the totalisator duty and the banknote duty, are individually relatively small from a revenue point, of view, but in the aggregate they will bo of some assistance in meeting the Budget shortage. „ Under the heading of “Death Duties it is proposed to impose an additional 10 per cent, estate duty on the amount by which the final balance of an estate exceeds £lOO,OOO. This additional duty will .bring in a considerable amount of revenue without imposing hardship on anybody. , , The exemption from gift duty is to be reduced from £lo'o’o to £5OO per person per year, and a duty of 2J per cent, imposed on dutiable gifts of from £5OO to £lOOO in value. The annual license fee for a sharebroker’s license is to be increased from £2 to £5. AMUSEMENT TAXATION. • To further assist in providing the additional revenue necessary to balance the Budget, it is proposed to reimposc the amusement tax on payments of Is or more for adpiission to any entertainments. This was the position prior to 1924, when the exemption was raised to tho present amount, 2s. On Is admission price the tax will be Id, from Is to le Gd a tax of 2d, and on higher charges Id for every shilling or part of Is, plus an additional penny as at present. , , . Allowing for these increases in taxation, and also for the increase in the petrol-tax for the benefit of tho Mam Highways Account, it is estimated that the revenue for the year will be as follows:—; ’ Customs 8,530,000 Beer duty .615,000

Film-hire tax ..... ........ 30,000 Motor vehicles —duties, licenses, etc. ~. 1,915,000 Stamp and death duties . 3,780,000 Land-tax I/i,.'.. 1,240,000 Income-tax ... 3,960,000 Interest on public moneys 805,000 Interest on capital liability—- - Bailways .7 -. 1,380,000 Post Office 510,000 Interest on Public Debt Redemption Fund 985,000 Other receipts 1,370,000 Total £25,120,000