HC Deb 22 June 1893 vol 13 cc1659-60
MR. MOWBRAY (Lancashire, Prestwich)

I beg to ask the Under Secretary of State for the Colonies whether he is aware that the Wellington and Manawatu Railway Company in New Zealand deducts from the half-yearly interest coupons of its debentures a tax of more than 15 per cent., imposed upon them by the New Zealand Government; whether the laws of the New Zealand Government imposing such a tax have received the sanction of the Home Government; and whether the Railway Company is justified in making such a deduction before paying the rate of interest contracted to be paid to its debenture holders in England?

* THE UNDER SECRETARY OF STATE FOR THE COLONIES (Mr. S. BUXTON,) Tower Hamlets, Poplar

By the Land and Income Assessment Act of 1891 taxation is leviable upon all income derived or received in New Zealand from business employment or emolument in the manner provided in the Schedules to the Act. By Schedule C, any Company which has borrowed money on debentures is deemed to be the agent of every debenture holder, whether resident or not; it is required to pay the tax for him, and is specifically authorised to deduct the amount of tax so paid from any instalment of interest upon the debentures. The Company have been advised that this power must be exercised by them, and that they cannot charge it to corporate funds. This Act was sanctioned, as was a later Act called the Land Tax and Income Tax Act, 1892. Debentures secured on lands are regarded as mortgages, and by the last-mentioned Act the annual tax on mortgages is fixed at 1d. for each £1 of capital—that is 8s. 4d. per £100 debenture. The tax amounts, therefore, not to 15 per cent, as stated by my hon. Friend, but 8⅓ per cent. But I understand that the whole of the year's deduction on the £5 interest on each debenture has been taken off the one coupon for the whole year. It is true that the Company has deducted this tax from the debenture interest; but I am informed that the attention of the Government of the Colony has been called to the action of the Company, and the New Zealand Government has now under consideration the propriety of amending the law, should it be found that its interpretation is such as to make it obligatory on the Company to deduct the tax in question.