how Government spending could be restrained other than in the
sphere of transfer expenditure. It is clear that this is bound to have
its consequences for the rent and subsidy policies. As it is, the
building of houses cannot be stimulated too artificially, as was the
case in the past.
The overcapacity in the building industry, as far as the housing
sector is concerned, will, therefore, not disappear when economic
conditions should improve. Together with the increase in the
number of institutions which are engaged in the market for
residential mortgages this development may imply a decrease in
the importance this market segment has for our company.
The increasing tendency to erode the ownership concept in our
society causes general concern; especially the amendment of the
Expropriation Act and the regulation of a priority right of
municipalities in acquiring real estate are clear examples of this
tendency, as are the conditions attaching to the letting of leasehold
land, which make the future pattern of costs entirely uncertain and
prescribe in too much detail the purpose for which the land is
intended. These measures restrict the possibilities of development
on a profitable basis and have a negative effect on the buildinq
industry.
With a view to stimulating employment the Government has
decided to support weak industries. It says it is aware that this can
only apply to companies which have a distinct chance of survival,
where necessary after restructurization. We think there can hardly
be any objections against this attitude, provided it does not lead to
undesirable Government interference and distortion of
competition. It is not unthinkable that Government interference
within the company should enhance the risk of distortion of
competition.
If, on the one hand, the Government supports weak industries, on
the other hand it thinks fit to impose additional taxes on the strong
ones. In this connection it is with apprehension that we await the
introduction of a retained capital gains tax. In calculating the so-
called surplus earnings objective criteria will have to be taken into
account for the various industries. There is no point in stating here
our fundamental objections against a retained capital gains tax.
However, we wish to point out a few aspects, in so far as they
concern our company.
Because objective criteria have to be applied in order to arrive at
the determination of surplus earnings, every company is brought
under the same denominator with at least similar companies.
However, the company results, as we argued above, are partly
determined to a considerable extent by the way in which the
business is conducted. The amount of a company's surplus
earnings, therefore, is not simply a fact resulting from branch of
industry and size of company. The retained capital gains tax will,
consequently, hit especially the well-managed companies, which
is bound to affect the incentive to conduct a proper management.
