COMPANY TAXATION.

Star (Christchurch), Issue 12286, 8 April 1918, Page 4

COMPANY TAXATION.

THE SMALL SHAREHOLDERS

Commercial Men’s Views.

The articles contributed to the “Star" by Mr 11. F. Wigram m (he subject of income lax inequalities are very generally approved by commercial men in the city. An interviewer on Saturday saw several business men, and invited their comments on the matter. A TYPICAL SHARE LIST. Mr R. C. Hishop, manager of (he Christchurch Gas Company, said that hy had been glad to see further attention drawn to the great injustice and hardship that the method of taxing public companies inflicted on the small shareholder. The company he was connected with had 519 shareholders on Hie register, and the amounts drawn by small shareholders could bo analysed as follow ; 11)7 drawing £lO per annum and under. 120 drawing £2O per annum and under. ' ■36 drawing £3O per annum and under. 2i drawing £lO per annum and under. 24 drawing £SO per annum and under. 62 drawing £IOO per annum and under. This represented 486 out of 519 shareholders who were drawing less than £IOO per annum out of the small savings they had been able to invest from time to time, and there were onlv seventeen shareholders altogether who were drawing more than £l5O per annum. REDUCED INCOMES. Many of the company’s shareholders, Mr Hishop added, wore elderly ladies-—spinsters, and widows with family calls upon them from children and grandchildren. The savings of an immense number of these elderly ladies would he found to have gone into institutions such as tho Gas Company, and the unfair incidence of taxation on companies had had the effect of reducing their dividends by 20 per cent. Hence those shareholders who were absolutely dependent on the dividends had actually sustained a reduction of their incomes to (he extent of a fifth. Had the incidence of taxation been distributed fairly, those very moderate incomes would have escaped in tlio same manner as tho earnings of similar amount in other occupations. In his company nearly two-thirds of the shareholders were receiving under £2O a year. Supposing these investors had been, assisting in tho development of other industrial institutions by putting I heir savings into such companies, it would have been possible for them to be receiving dividends say from thirty companies, which, unfortunately, would ail he liable to tlio heaviest impost of I s 6d in tho pound, whereas had the investors been drawing £3OO a year from any other source they would have been entirely free from income tax, CRIPPLING OF INDUSTRY. Mr Bishop added that he was afraid the heavy impost on companies would prevent investment in many local industrial enterprises where heretofore the capital had been largely subscribed by the small saver. It was an admirable thing for all parties that the residents should be encouraged to take an interest in expanding and extending their local industries. Heavy taxation of the nature now imposed would have a contrary effect. The success of a, local industry depended largely upon the interest taken by those who had a' direct monetary investment in it. 'The direct interest, of. those people and their friends frequently assisted the devclopincnt of a new and struggling industry. Where shareholders were penalised to such an extent tHcijr interest would flag, and they would be indifferent to any new enterprise that might he brought under their notice. Naturally they would prefer to keep whatlittle money they had saved in such :% manner that they would he able to take advantage of the £3OO limit free of income tax REDUCED SHARE VALUES. Air Frank Graham, president of the Christchurch Stock Exchange, said that he considered tho remedies suggested by Mr Wigram for tlio present anomalies were fair and equitable. The difficulty had been apparent for a long time, and while it had been necossarv only in a few cases to reduce the dividend ns the result of the heavy taxation, less had been put to reserves, and the marketable value of shares had been reduced. Air Wigram had employed supposititious cases largely, but they were quite probable cases, and ho, was cntiic-iy in accord with the arouiments.