CHAPTER IV.--THE FINANCIAL POSITION.
Revenue. (continued)
CUSTOMS DUTIES.
159. The operation of the
tariff in Newfoundland has caused us serious concern. Not only is there a very
wide range of duties, few commodities being exempt, but the duties are in many
instances so high as to be seriously oppressive. The tariff if not the outcome
of any scientifically considered policy but may be taken to have reached its
present proportions as the result of the pressing need for additional revenue
which was the annual experience of a series of financially embarrassed Governments.
Until recently it was the policy of Newfoundland Governments to admit free of duty
those articles such as flour, salt and petrol which were among the essential
requirements of the fishermen; to-day even these articles are taxed, and the
resulting increase in the fishermen's costs has proven a severe handicap to the
rehabilitation of the industry in the face of foreign competition. In other
respects, too, the level of duties is now so high that the point of diminishing
returns appears to have been reached. There is no doubt, in our view, that the
tariff is unscientific and urgently needs readjustment. It is, moreover,
excessively complicated and could be simplified to the general advantage.
The readjustment which we recommend can only be carried out after detailed
and expert examination and we are glad to know that Newfoundland Government
are about to take steps to obtain special assistance with this object in view.
It is not unlikely that a general lowering of the duties now in force, and their
readjustment on a scientific basis, may result eventually in an increase of
revenue; but for the immediate future a reduction in the revenue derived from
this source must be anticipated.
160. Apart from the revision
thus contemplated, the customs tariff has recently been subject to alteration as
a result of the Trade Agreement between Newfoundland and the United Kingdom which
was concluded at the Imperial Economic Conference at Ottawa in August, 1932.
Under this Agreement, the text of which is printed in full in Appendix K, the
United Kingdom undertook, subject to certain reservations, to continue to grant
free entry to Newfoundland products, and to arrange for such duties to be imposed
on foreign cod-liver oil and chilled or frozen salmon entering the United Kingdom
as would result in a preference to Newfoundland over foreign products of 1s. 4d.
a gallon and 1½d. a lb. respectively. The Agreement also provided that the general
ad valorem duty of 10 per cent. imposed in the United Kingdom on foreign codfish
and marine shell should not be reduced except with the consent of His Majesty's
Government in Newfoundland. In return, the Newfoundland Government undertook to
arrange for the enactment of legislation granting the United Kingdom preference
over foreign countries on 61 articles in the Newfoundland tariff and providing for
a more favourable valuation of the pound sterling for customs purposes. Articles
were also inserted providing for certain reciprocal concessions to Colonies and
Protectorates. The Agreement came into force on the 1st July, 1933, and it is
estimated that the effect of the preference granted to the United Kingdom will
be to diminish the receipts from customs duties by some $150,000 per annum.
The effect of the Agreement
on the cod-liver oil industry in Newfoundland is considered in Chapter VI,* while
the discussions which took place during the Ottawa Conference in connection with
the iron-ore industry are referred to in Chapter VII.†
INCOME TAX.
161. The following is a
statement of the rates in force:-
Subjects. | Taxation Rates. Per Cent. |
Banks and Trust
Companies. | On the average amount of money
On deposit and current loans ........ 5/16 of 1 |
Fire Insurance
Companies. | On premiums of insurance on
property within Newfoundland ................... 6 |
Life Insurance
Companies. | On premiums of life insurance
received from the public within
Newfoundland ........................................... 2 |
Personal
Holding
Companies. | Incorporated in Newfoundland for purposes
such as investing or trading in bonds, stocks,
securities, but not doing business with the
public in Newfoundland:--
On capital $250,000 or less .................. $50.00
On next $750,000 at per $1,000 ............... .10
On excess over $1,000,000 at per
$1,000 .................................................. .05
Maximum tax .................................... $250.00 |
Lotteries | On amount of prizes ................................. 12 |
Landed Estates | On rents collected less necessary
expenses ............................................... 12 |
Companies | On net profits .......................................... 12 |
Individuals | Exemption of $1,000 for single
persons and $2,000 for married
persons, on incomes exceeding
above exemptions but not
exceeding $6,000 ...................................... 6
On the excess over $6,000 ........................ 12
Supertax is payable as follows:--
Incomes up to $6,000 are exempt.
On the next $2,000 above $6,000
the rate is ............................................... 2
On the next $2,000 above $8,000
the rate is ............................................... 4
On the next $10,000 above $10,000
the rate is ............................................... 6
On the next $10,000 above $20,000
the rate is ............................................. 10
On the next $10,000 above $30,000
the rate is ............................................. 15
On the next $10,000 above $40,000
the rate is ............................................. 20
On the next $50,000 above $50,000
the rate is ............................................. 30
On the amount above $100,000
the rate is ............................................. 35 |
* Paragraphs 327-328.
† Paragraphs 444-445.
NOTE.-- (1) In addition to the statutory allowance of $2,000,
married persons receive a dependent allowance of $300 for each child under
20 years of age.
(2) In the case of a child over 20 years of age and having a
mental or physical infirmary, an allowance of $300 is given.
(3) In the case of householders an allowance of $300 is given
for dependent relatives.
(4) Where dividends are received from taxed companies, such
dividends are not included in the taxpayer's income for the ordinary income
tax, but are so included for supertax.
(5) The allowances specified under (1), (2) and (3) are not
deducted from total income for the purpose of supertax assessments.
(6) Where taxes are paid on filing income tax return and on
receipt of assessment notice, individual taxpayers receive a discount of
5 per cent. on the amount of the total tax.
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