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The Pamphlet Collection of Sir Robert Stout: Volume 81

Not All Profit Anyhow

Not All Profit Anyhow.

Now, the profits earned by this fortunate 5885, in excess of the exemption where allowed is £7,775,579 per annum. But let no one fancy that these profits are, from a national point of view, a final balance of profits over all losses in industrial enterprises. If we are considering how the whole general body of workers can be better paid out of profits, we must investigate the profits of all the industrial enterprise in which page 9 the general body of wage-earners are employed. But the £7,775,579 of profits I live referred to is not a national net balance. In every year in this country, as in every other country, some industrial enterprises employing labour are producing no profits at all but are carried on at a loss. I do not say they are carried on year in and year out at a loss but in any given year the totals of that occasional loss which every great or considerable industrial or commercial enterprise has to undergo must be very great. Only bankers and business men or better still, the Commissioner of Taxes could even form a rough approximation of what this loss on the year's balance-sheets amounts to, taking every business concern of every kind (except fanning) all over New Zealand. I am unable to name any definite sum, but the Commissioner of Taxes, on the fullest consideration thinks it amounts to a total which is equivalent to 25 percent of the £7,775,579 assessed as profits by the Income Tax Commissioner, that is, to nearly £2,000,000 a year.

But before we can estimate the not amount of profits made in all businesses and available as a fund to increase wages, we must deduct these great annual losses—and so reduced we would probably find that the whole sum if seized as available for distribution among the workers employed in business in increased wages, would not yield a rise of very much per day.

But there is still another important consideration regarding these profits, and it is this: If a man begins business, and puts £10,000 into it, which is lying invested at interest on gilt-edged securities and yielding him, without any care or effort at an, £400 a year, he expects, and rightly expects, to get out of his business with all its risks, fluctuations and anxieties, sufficient income to provide interest proper on his invested capital and a reasonable amount of profit in addition.

Put another way. If the workers were investigating me amount of profits made by all employers with a view to taking a new share of these profits for increasing wages, they would recognise that before the net amount of profits was determined, interest at the current rate should first be deducted for the capital invested, and used in the business by the employer. Now with this made clear, let us turn again to the £7,775,579 of profits above referred to.

In arriving at this sum no deductions are allowed by the Income Tax assessment for the capital of the trader, firm, or company employed in the business, unless it be invested in the business land and buildings, and then a deduction for the rent is allowed, and if it is lent out on mortgage the interest is not assessed as profits. It is true a deduction is allowed for interest on borrowed capital so employed in the business, but not for the capital of the trader or company, himself or itself. Now, what capital upon which no interest is deducted for income tax purposes is invested to produce this £7,775,579? I have not the definite amount, but such figures as I have will help you. I cannot give the capital so invested by private persons and firms who represent nearly four-[unclear: fifths] of all the businesses upon whose profits income tax is paid. I have, however, some figures with regard to companies. The following is a return showing the paid-up capital in each district. [I was unable to get the Auckland figures as to the paid up in time to this address, and so had to rely upon an average. [I was, moreover, unable to get the Westland return.]