COMPANY TAXATION.

Waikato Times, Volume 97, Issue 15274, 26 June 1923, Page 7

COMPANY TAXATION.

ITS BALEFUL EFFECT. Sir J. G. Ward, interviewed by the New Zealand Times, on New Zealand’s financial position, referring to the taxation of companies said:-^-“An examination into company taxation, as between our system and that in operation in England, Australia, and America, is entirely against us. They have all gone through the war and the slump period. This system will, if continued here, compel numbers of our best industrial companies to go into liquidation. I have before rne a public statement issued by authority of eighteen of our farm, stock, and station companies, whose main business is trading with farmers. They are all New Zealand companies, and they say publicly —‘This will bring up the question with purely New Zealand companies of whether business should be continued, or whether, as a reasonable return cannot be earned on the shareholders’ capital, the businesses should not be liquidated and'the capital returned to the shareholders.’ .They give a typical case of an investment, of £IOOO between two farmers if made in a company, and show—which’ I have never seen contradicted or disputed — that 24 per cent would require to be earned by the company to pay a dividend of 8 per cent on the £IOOO, and it all comes out of the farmers. A number of these eighteen companies have, speaking generally, been friends of and supporters of Mr Massey’s party. “Surely it is enough to make sane men anxious as to the future. Even with the dropping of the extra Is 3d income tax, which was put on since the war ended, a reduction of a sixth would only reduce the figure abovenamed to 20 per cent; and this would still be a crusher. So it would be mtn if the income tax is reduced to ss. “The whole system unquestionably requires drastically altering. It operates similarly to all companies as well as to those I refer to. 28.8 Per Cent. Taxation. “Let me give a further illustration of the damaging effect excessive taxation in peace time is hiding upon the whole country If anyone interested wilL look up the ‘Ausve Banking Record’ of May 1923, they w;.l, on page 353, And the report of the National Bank of Australasia. Its gross profits are shown as £1,114,392, and Its rates and taxes are £58,254. This is equal to 5.22 per cent of their taxation. If you take the last balance sheet of the Bank of New ZeaIsnd, March, 1923, the gross profits are £1,546,041, and its rates and taxes are £445,671, equal to 28.8 per cent taxation! The gross profits of the Bank of New Zealand are only about 50 per cent more than t.h>ee of too Australian banks; yet the Bank of New Zealand pays nearly eight times more in taxation. The last published balance sheet of the National Bank of New Zealand is up to March, 1922. Their gross profits arc shown as £595,904, and rates and taxes £206,080. That is equal to 34.7 per cent taxation. If you exclude their British taxation, their New Zealand taxation amounted to £143,967, or 24.1 per cent on their gr*ss profits. They did about half the business in New Zealand the Australian banks did; yet, their taxation, excluding their British taxation, was nearly two and a half times more than that of the Australian bank. “What A Relief!” “If anyone takes the trouble to analyse these results they will find that in taxation the two New Zealand banks are handicapped to the extent of between three-quarters and one pet cent on the rates they charge to their clients for advances, as compared with what is payable by the Australian bank cited. What a relief a reduction in rates and taxes to the Australian level would be t 0 this country no one can deny. The beneficial effects on all classes, in both town and country, would be incalculable. I have given the case of two New Zealand banks. I will add to it the position of one of the Australian banks. One-eighth of its total business is done in New Zealand; hut, of its total taxation, 52 per cent is paid to the New Zealand Government. In other words, 12 4 per cent of that bank’s whole business is done in this country, yet 52 per cent of its whole taxation is payable in this country!