Taxing Capital.

Gisborne Standard and Cook County Gazette, Volume II, Issue 276, 21 March 1889, Page 4

Taxing Capital.

Tim “ Economist ” of January 19 writes under the above heading as follows s—“ Complaints hare been made lately of the growing hardship experienced by companies carrying on financial business in New Zealand, in consequence of the imposition of a tax upon capital employed in the colony in lending and discounting bills. If the tax were levied on profits it would be fair enough, though even in that case it would be well to make the impost as light as possible, for New Zealand is greatly in want of financial assistance of the kind; but to tax capital whether employed or not ■new to be so impolitic that we cannot understand how the Government can have taken such a step. The other Australasian colonies, where the opportunities of using capital profitably are at least equal to those offered by New Zealand, have never imposed such a tax, and the consequence u that ready money, which is so much needed in the lattercolony, is finding its way to quarters where there are no restrictions upon its employment. At the meeting of the New Zealand and Biver Plate Land Mortgage Company the other day it was stated that the burden of the tax upon capital has steadily increased, and that in the year under review it has cost this comparatively small company £4133. In this case the effect will be that capital will be gradually withdrawn from New Zealand for investment in the Biver Plate, where much higher rates of interest are obtainable. It is to be hoped, in the interest of the country itself, that the policy of taxing capital, irrespective of profits, will be abandoned, for its continuance can only have the effect of adding to the obstacles which the extravagance of successive Governments have placed in the way of the commercial progress of New Zealand. Capital is urgently needed to assist in the agricultural development of the country, and it is certain that if this financial assistance is not forthcoming in New Zealand, settlers will go elsewhere, and the colony will suffer in consequence. The tax, though felt as a bardhsip by individual companies, can in the aggregate produce little for the colonial exchequer ; at all events, it cannot compensate the colony for the withdrawal of capital which is threatened. ’’