TAXATION PROBLEMS.

Waimate Daily Advertiser, Volume XXIII, 20 May 1922, Page 7

TAXATION PROBLEMS.

A ROTARY CLUB LECTURE. “The Taxation of the People was (says the Auckland Star) the su - ject of an interesting address deli - •1-ed at the Rotary Club’s luncheon, £ v Professor H. W. Segar, who contended that the taxation system of New Zealand was faulty in many respects, and urgently needed amend ing on a broader basis, so that the burden of taxation would be more widely distributed. Among other things he pointed out that Government and municipal enterprises escaped taxation to which similar private enterprises were subject. That was one of a number of exemptions in our system whcih were theoretically unsouiid, and should be done awav with. The speaker dealt at some length with defects in the income tax systnie in Neww Zealand. The income tax, he said, was looked on by economists as essentially a war tax, for the raeson that taxation systems could not be radically altered in war time, and the income tax provided the quickest and most convenient method of getting money in quickly in times of urgency. But it was held that after war a high income tax system in New Zealand, of preventing the accumulation of funds for'.enterprise, appropriating cash reserves from businesses, and so removing the stimulus of reward for investing capital in the extension of business and commerce. After quoting prominent financiers and even a Labour leader (W. A. Appleton) to this effect, the Professor pointed out the inequalities of the income tax system in New Zealand. In Britiain, he said, the man of moderate means, with family responsibilities, had exemptions made for wife and dependent relatives as well as children. In New Zealand the rate of profit of business concerns was ignored, as also was the matter of whether or not the tax was passed on to the public through increased prices on the commodities sold. These were things that other countries took cognisance of. Again, in Britiain, profits of a business were averaged over a three-year period, whereas here no account of business fluctuations, resulting to the very great disadvantage of some businesses that did not have a ready return. Another point made was that in New Zealand the maximum rate was charged over the whole taxable income, with the result that where the eom'apny, bj’ special effort,increased its return from £9OOO to £lO,OOO, it had to pay to the Government in taxes two-thirds of the extra £lOOO made.. What inducement was that to people to extend business? In conclusion, the speaker pointed out that in taxing companies, the Government made no discrimination between the small shareholder and the rich man with many shares. All these things, he said, wer e being dealt with in other countries, where it was recognised that clumsy taxation stifled trade and enterprise, and there wag no reason why the problems should not be tackled in New Zealand.