84

8.—5.

[A. FELS.

You realize that there is a good deal of speculation goes on in town property ? —There: is. And, of course, the graduated land-tax must check that to some extent ? —-Decidedly. If it were removed it would render it much easier and much more profitable few- speculators ? — Yes ; but even at present I do not believe that speculators take, the graduated land-tax into account— I mean speculators in town properties. They are very short-sighted if they do not ?—Yes ; but I do not think it plays any part in the speculation, Mr. Clark : It does not touch them ;it is too small. Mr. Shirtcliffe.] Instead of abolishing the tax altogether, would you prefer a flat rate of land-tax ? —That woulel be an alternative if it is not possible to abolish the land-tax. That alternative would be an improvement, and would be acceptable. Before the war we had the two taxes, the flat rate anel the graduated tax. The Chairman.] If the flat rate were adopted, heiw would it affect you in connection with your present grievances ? It would relieve: us. It would certainly abolish eiur hardship. That is what Mr. Clark referred to. Mr. Clark : It would remove all the necessity for section 52 and the other sections in regard to joint ownership. The Chairman : Tei avoid the effee:t of the graduated tax ? Mr. Clark: Yes. Mr. Begg (to witness).] Do 1 understand you to say in your evidence that if you lease a room em the sixth floor of a building you are assessed for a portion of the value of the lanel on which the building stands ?- -Yes, according to the present Act. Mr. Clark : If the company hael other lands : that is practically the provision—instead of a room it has the whole floor. Witness : That is the case in Wellington. It is not the whole of a floor ; it is a portion of the: grounel floor. Mr. Begg.] But it would apply to any room ? —Yes. And this tends to put a big firm with numerous branches at a considerable, disadvantage, ? —Yes, decidedly. And your contention is that the big firm with the aggregation of capital is an advantage, and should not be so discouraged, and that this is discouraging it ? —Yes. You mentioned that it is impossible to pass on these, taxes ? —Yes. Woulel high graduated taxation not tend to stifle competition ? To seime extent it weiukl. And as it stifled competition it would enable the; tax to be passed on ?■■- Well, nei, it would stifle competition on the part of the highly taxed, businesses, but not on the part of the, small trader. The survivor would get the advantage ? —Quite so. It would mean that large concerns —companies or partnerships—-would be unable to compete. They would go out ? —They would go out. And the survivors would reap the harvest through the reduced competition ?—Yes ; it woulel mean less tax for the Government. And would it lead to more profit for the survivor through lesser competition ? —Well, there, would be, a greater number of smaller traders. The law of supiply and demand would probably rectify it. You think it is impossible for the tax to be passed on by any trader ? —I would not say it is entirely impossible, to pass it on, but competition rules prices. May we take it that a trading firm's profits have been reduced by the amount of tax that has been imposed ? —Absolutely. Mr. Hunt.] As to passing on the tax, you cannot pass it on because you are in competition with the small trader ? —That is so. But take the class of business in which the small trader cannot compete, and which can only be, handled by the large trader or company, then all those in the trade woulel be paying a high tax, would they not ? —That might be the consequence. Do you run your business with the object of earning a certain rate eif profit ? —Yes. And if you do not get that rate you withdraw from it ? —Yes. So that in the end if the large businesses were faced with the competition of the. small, traders it must result in the tax being passed on ? —Not necessarily, In our piarticular business the question of taxation is not an overhead expense. But your business is such that your competitors are small people ?—Yes. But supposing you were conducting the class of business that could only be handled by large operators, then all the people in that class of business would be paying high taxation ? —lf those businesses formed a combine and regulated prices. But even if they did not form a combine, would it not follow that you run your business to earn a certain profit, and if you could not earn that profit there would be a gradual withdrawal of capital until the competition eased ? —Well, it might be so. That is purely theoretical, but in practice it does not exist. But there are many industries which can only be carried on by large operators ? —Well, hardly, in the industries that are distributing goods. But take concerns like shipping, coal-mining, fire insurance, banking : these can only be carrieel on by large operators, and small people cannot compete in them ? —Yes, that is quite true. You mention banking, but notwithstanding the, increase in taxation tho banks have not increased their charges. Have they not widened the difference between their deposit rate and the lending rate, and they have increased the exchange rate ?—Well, that is again governed by external factors.