185
If bought for forward delivery, and there were a set off
sale, the figures would be
Increase
$260 40
$220
If the transfer duty were made 10 cents per $100, the respective
increases would be $45 and $90.
(b) If the transfer duty were made 10 cents per $100 the revenue would lose.
The following example has been given :-
$10,000 worth of shares, 10 transfers @ 10 cents.....
At present, assuming that transfer duty is paid only once
in every ten transactions the duty paid is-
1 transfer @ 20 cents
20 contract notes @ $5
Total ...
$100
$20
$100
$120
$20
Consequent loss to revenue
If, however, the transfer duty were 20 cents per $100 there would be not
à loss but a gain to the revenue of $80.
(c) There would possibly be very little more registration of transfers than at present. It is true that registration would not involve the payment of any duty, but there would be no new inducement to register, and the usual influences against registration would still exist, e.g., trouble and lack of secrecy. The proposal would therefore be of little or no help towards pre- venting evasion of estate duty.
(d) If a heavy ad valorem duty were placed on contract notes some persons would probably be tempted to break the law and would not give or demand contract notes, especially where it was not intended that the shares should ever be taken up. People will pay a light and convenient duty, but will evade a heavy or inconvenient duty. At present every contract pays something, though perhaps in the case of contracts between brokers this is not always the case.
(e) It has been urged by some that secrecy of holding and dealing would be
impaired.
(f) New taxation would be imposed because at present transfer duty is pay- able only when a transfer instrument is executed, and there is no obliga- tion to execute a transfer instrument on every sale.
(g) This additional taxation would possibly drive capital out of the Colony.
(h) It would also tend to produce a less virile market, and a virile market is desirable so that capital may be moved between trade and share invest- ment according as trade requires capital or is slack. It is also desirable because loans on shares are a means of financing trade.
(i) A reasonable revenue on share transactions is collected at present. For example, on a contract of just over $10,000, which is probably a sum frequently dealt in, the ratio between the share contract note stamp duty and the share transfer stamp duty is as much as 50%, thus:—
Transfer duty on $10,050 at 20 cents per $100 Contract notes (2) duty.
The Committee does not recommend the adoption of this proposal.
$20
$10