“GROSS SCANDAL”

Taranaki Daily News, 16 October 1931, Page 9

“GROSS SCANDAL”

IMMUNITY FROM TAXATION PROFITS OF POWER BOARDS STATE TRADING CONCERNS PRIVATE TRADER’S BURDEN DEPUTATION TO MINISTERS By Telegraph.—Press Association. Wellington, Last Night. The : position in which the private trader is placed because of the nontaxation of Government and municipal trading concenici was brought to the notice°of the' prime Minister (the Rt. Hon. G. W. Forbes) and the Minister of Finance (the Hon. W. D, Stewart) this evening by a deputation from the Gas Companies’ Association, the Associated Chambers of Commerce and the New Zealand Employers’ Federation. Speakers claimed that there was no reason for this differential treatment and that such conditions were illogical ,apd unfair. Air. Forbes promised- to ‘consider the representations with Mr. Stewart.

Dr. C. P. Knight, Wellington, said that under the 20 per cent, surtax imposed by the 1931 Budget the Auckland, Wellington and Christchurch gas companies would be called on to pay an additional £8458 per annum. The users of electric light and power, on the other hand, paid nothing. Tiie present state of affairs meant that the burden had to bo carried by the private trader. Since the Government and municipal activities were being extended the burden would increase and. might become unbearable.

. The gas industry, Dr. Knight continued, had not the special privileges enjoyed by power boards and State electrical enterprises such as exemption from taxation, exemption from stamp duty, special railway freights, subsidies on the cost'of coal, and as far as the Government was concerned exemption jTom Customs tariffs and exemption of interest on the capital cost of . uncompleted works. Such interest in tiie case of uncompleted hydro-electrical works was charged to the Consolidated Fuijd. It was stated by Air. F. E. Graham, Christchurch, that the question of taxation of State and municipal trading undertakings had been brought before the Prime Ministers for the past 20 years, and they had invariably approved the principle but it had been shelved ou the ground of expediency. MORE MEN EMPLOYED. For every £100,000.. of capital employed, electricity required labour of 11.3 men and paid £2803 in wages, Air. Graham said, but in the gas industry every -,£100,000 of capital employed 35.5 men and paid £8771 in wages, or three times as much as did the electrical industry, and this was not allowing for wages paid in mining cogl or wages paid by the Railway Department in transporting it. “There is no reason why the State and .municipal - trading enterprises and the power boards in the Dominion should not pay income tax on their net profits after the payment of interest; also on the amounts set aside for a sinking fund,”, said Mr. James Lowe, Auckland. “The gross scandal perpetrated by the Auckland Power Board is an illustration of our views. With immunity from taxation, it has erected a palatial, building in Queen Street, -Auckland, out of its non-taxed profits.- -These premises are largely used for letting purposes, but it pays no income tax.” Air. A. T. Markman, Wellington, supported the views of the previous speakers.

The Prime Minister said | that the difficulty of taxing municipal electric light undertakings was that the .Government had undertaken a policy of hydro-electric installation, and -that when it reached the point of delivery in bulk it came to the conclusion that it was not able to carry out reticulation, and power boards were set up to do the work. The power boards were in the nature of seini-Governilient bodies. It was not expected that they would be tradino- concerns. To get at the profits of'a concern like a power board was a pretty elusive matter. It was felt that if taxation were imposed there would be no profits and that the prices would be made higher. Mr. horbes admitted that with the heavy increases of taxation on industry the position between private concerns and municipal and Government concerns became more accentuated. It was not the policy of the Government to extend the field of municipal and State enterprises. At the present time the Government was leaning very much on local bodies in respect to relief of unemployment, and it was not the most opportune time to impose taxation on them. Although there was a good deal of justice in what the deputation had said, Mr. Forbes thought the members would admit that. He would discuss the representations of the deputation with the Alinister of Finance to see if it were possible to meet some of the difficulties.