Gold Royalty

An Alternative to Income Tax

THE statement by Mr. J. P. Blaikie Webster at the annual meeting of New Guinea Goldfields Ltd. on March 27, that the company regarded the system of imposing a royalty on gold produced as unfair, and that representations had been made accordingly to the N.G. Administra tion, has caused a stir among New Guinea interests.

The N.G. Goldfields Co.’s argument appeared to be in favour of imposing taxation on profits made in connection with the industry, rather than on the value of the product; and this clearly would mean the introduction eventually of some form of income taxation.

The experiences of all countries during the past two decades have shown that income taxation, like Customs tariffs, can quickly develop into a form of bureau cratic oppression that cripples enterprise and most definitely stultifies national pro gress; and New Guinea would be ex tremely unwise to adopt any form of in come taxation, or taxation of profits, while the country is making such satisfactory economic progress.

Critics have pointed out that, if the N.G.G. suggestion were given effect to, the Bulolo Gold Dredging Company would be discriminated against in an unfair manner. The Bulolo concern is, of course, making large profits from dredging, but it is doing so only because of its fore sight, perseverance and organising ability.

It is held that it is not anv easier to produce gold by dredging than by any other form of mining.

So long as gold is at a premium, it Is most convenient, and manifestly fair, to

recover the cost of administration from the country’s principal industry by a royalty tax on that industry’s product.

The experience of other countries also suggests that that method of obtaining necessary public revenue is nationally sound, in a politico-economic sense. A little investigation and thought will show that this method also achieves, though indirectly, the important purpose of spreading the taxation fairly, and not in an oppressive fashion, over the whole

community.—R.W.R.