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to pay a considerable sum in income-tax, as against the other man who is supported by the community and pays nothing. I submit that that is wrong, and that the people: who obtain money from investments should pay something, however small their returns are. They should give .something for their protection. Mr. Shirtcliffe.] I see that on page 2 of your statement you refer to " the aristocracy of capital," and say " If companies are exempted from taxation they will simply be added to the, list of what I have on a former occasion called ' the aristocracy of capital ' existing in New Zealand, which is, firstly, the Government tax-free loan, and, secondly, local-body ele;benture:s " : do you suggest that the tax on local-body or company debentures should synchronize with the tax on money raised by any other means ?- -There has been a, statutory promise given as to past moneys. I elo not think that that should be broken, but with regard to future moneys they should be put on the same level as any other class of income. Let me illustrate: it. Why shoulel a gas company .or an electrical company have to pay a higher rate in one case where it is privately owned, whereas if it is floated by a local body they get off on a lower basis ? Why shoulel they ? Precisely; but would you limit that to debenture's issued in the future? Would you consider it a breach of faith if the tax em past issues of elebentures were raised ?—Certainly. 1 think it, might be: held to be a breach of faith. One wants to be, extremely careful. Of course, there was a statutory contract, when the Government issued tax-free war loans, but * lit 1 not people invest in debentures with the knowledge that the tax might be. varied from year tei year I —Undoubtedly, Could it be considered that interest on all those: debenture's were: [Hit on the same: footing as money from other sources? Weiukl that, be a breach of faith on the part of the, Government of the c:ountry ? —I am neit quite sure about the: wording of the statute, but lam inclined tei think that it would neit be. The Chairman.] The: Legislature, does not undertake, by passing an Act, that, it will not alter it next year ? —But it ditl so in regard to the tax-free war loans. Yes ? —I have never heard of a case where the: Government has reduced the taxation that the owners of the debentures have objected. Mr. Begg.] You mentioned the case of a man and his wife; having £600 a ye:ar from investments and by splitting it between the two they could escape taxation : would you favour husband anil wife's income being lumped for taxation purpose's ? —No. I think that is putting another burden on to the married man, and he has plenty to carry at present. How weiuld you meet the case ? It is very difficult to know how tei do it in that case ; but I think that in the instance T mentioned) where the wheile; eif the money is derived from investments, there; eiught to be a, tax placed upon money derived from capital what you might call unearned money. . They should neit get a £300 exemption ? —1 elei not think they shoulel. What exemption woulel you suggest for what; we call unearned income ? I have not considered the amount, but I think it should pay something. The Chairman.] What is the, lowest amount, Mr. Clark, on which it would be worth your while to collect income-tax ? Mr. Clark : I could collect as low as £1, I think. The Chairman : What income: would that be em at present rates ? Mr. Clark : An income of £20. Mr. Shirtcliffe.] Would it pay to oolleet it ? There would not be; much trouble. Mr. Begg (to witness).] You think that unearned income ought to be taxed and shoulel. not, get, the exemptions that earned income does ? —I certainly think it should pay. It does pay at the present time through companies. In your last paragraph you say, " 1 believe also that the exemption eif companies will make- it more difficult than ever for farmers to obtain finance " : woulel yen mind telling us how you arrive at that ? —lf companies' shares were exempted it would make them very much more attractive to investors. They would probably pay larger dividends, and there, would be: less money, available for investment on mortgage for farmers. You think that such a large number of new companies would come into existence ? —I do not say that, but I think the present companies would become very much more attractive, and 1 think it would give a very large bonus to people who hold shares at present. The Chairman.) Any change would mean giving a bonus to the present holders, would it not ? —Yes, it would give a bonus to the present shareholders. They would only be taxed according to their indivielual rate. Mr. Begg.] I am not clear how the mere fact that the present shareholders' property weiulel increase in value would absorb any more of the available capital ? —I think you woulel find that peeiple woulel be inclined to go for company shares more than they dei now. The Chairman.] You do not make it clear how the exemption woulel make it more difficult for farmers to obtain finance ?—I think that people would be much more inclined to invest in companies than they would be: to lend money on mortgage, and I think it would probably tend to the creation of now companies, One does not want to go into the: general question eif the effect of collective capital. That is a modern creation of the last sixty or seventy years, and we do neit yet know what effect it is going to have on society generally. Mr. Shirtcliffe.] I think I unelerstand what, Mr. Acland is suggesting —that is, that there would be much greater speculation in company shares ?- 1 think there would be. And money would be withdrawn from ordinary channels of investment in order to speculate in shares ?—Yes. Anything that gives greater preference to the form of company investment tends tei create monopolies, and you get these enormous monopolies that we are getting now. Take steamer s

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