Judge’s Decision On Taxation Exemption In State Services

Wanganui Chronicle, 22 December 1949, Page 6

Judge’s Decision On Taxation Exemption In State Services

AUCKLAND, Last Night (PA).The opinion that benefits accruing ty. State-owned transport service because of its exemption from taxation should not be passed on to users was expressed by the Transport Charges Appeal Authority, Judge Archer, in a reserved decision.

The case was that in which the Railways Department appealed against the decision of the Transport Charges Committee authorising the department to increase the revenue on the Auckland-Pukekohe and Aucklandxuakau services by £5864. Judge Archer decided that the revenue should be increased by an additional sum of £1793, making a total of £7477.

The committee decided that, othei things being equal, the return to the Railway Department should be substantially the same as the net return after taxation received by a private operator.

Said the Judge: “I am of the opinion that the committee’s duty is to prescribe proper and economic fares which will provide a reasonable return on the capital employed in any undertaking, whether the undertaking be operated by the State or hy a private operator.”

If the benefits accruing to the State service by reason of its exemption irom taxation must be passed on to users, fares for these services would be reduced to levels which would be unecanomic in the case of private operators. Consequently private operators would be exposed to unfair competition while the State would be deprived of revenue which, in t case of a service carried on by a prvate operator, would have accrued to the State as taxation. He therefor? agreed with appellant that the deduction of £1076 from the department’s allowance for profit was unwarranted. Dealing with the allowance for depreciation on the department’s fleet o. buses, Judge Archer said he was satisfied that minor adjustments should bt made to the figures submitted by the Transport Department and adopted by the committee. In lieu of the figure o £5283 he allowed the sum of £6OOO. The Judge declined to allow appellant’s claim that the sum of £6OlO paid for goodwill when the services were acquired in 1948 should have been included as part of the capita’ usefully employed for the calculation of profit. He adaed that it would be necessary for the department to prepare a new schedule of fares to provide the increased revenue of £7?' and referred the case back to the committee for the purpose of finally approving the revised schedule and o' i fixing the date from which it will take • effect