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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