A SALES TAX.

Auckland Star, Volume LIII, Issue 142, 17 June 1922, Page 5

A SALES TAX.

TO VARY INCIDENCE OP TAXATION. SUGGESTED SYSTEM CONDEMNED. "There have been persistent rumours that the Government, in an attempt to ' adjust the resent system of taxation so as to give relief to some sections of taxpayers, by spreading the burden on to other sections, may consider the imposition of a tax on sales,:' said Mr. G. Fowlds, jun., of the firm of Geo. Fowlds, Ltd.. in the course of an interview this morning. He continued: "While some payers of income tax are able to pass some of their quota on, a number cannot, and they probably might readily grasp at any straw which may make their load lighter. The business community particularly should investigate very closely any form of new taxation, because taxes often have unexpected results. In any case we have too many kinds of taxation already, and an effort should be made to consolidate and simplify instead of adding to their number and variety. Taxes like the amusement and receipt stamps are very irritating and annoying to the public, probably out of proportion to the revenue produced. It is not good policy to adopt any freakish form of taxation without considering whether it accords with the accepted canons of taxation. These briefly are: (1) In proportion to the services rendered by the activity of the State should be the contributions to the expenses of the State. ("2) Certainty as to the amount of payment. (,'l) Convenience of the taxpayers as to time and manner of payment. (4) Economy oi collection. Further, as indispensable to a just ay. tarn is this: Xo one should lie called upon to contribute to the revenue of the State until he has first satisfied the primary needs of existence. A further golden rule of taxation is: 'Never tax anything that is of U6c to mankind or that would and could run away.' ' RETAILER AS COLLECTOR. "A tax on sales would presumably be made at the puint where the final transaction is made with the customer," continued Mr. Fowlds. "The retailer would therefore be the tax collector. Under conditions and regulations laid down by i the authorities he would collect from the buyer a certain percentage of the amount of the sale say 3d in the £. He would either charge the customer this amount in every case or pay to the Department the percentage on his total sales for a week or a month as laid down.

"It is believed that in order to give some appearance of fairness certain exemptions on the necessaries of life would be made. These would at the same time add to the complexity of the scheme. It would hardly be called a luxury tax, because that would limit the amount of possible revenue, so a fair range of articles would have to be subject to the tax. This can only mean an addition to the cost of living. If it is substantial it nii.'ht iustify c'aims on the Arbitration Court for a further rise in the wages of workers. Then the whole vicious circle of trouble would begin. Being a tax on the product of labour it would be an additional burden on industry and enterT'*p It "-'ii'H be interesting to know if the millionaire's motor and the worker'n bread and bacon will be taxed pro rata. There are heavy enough taves throush Customs duties on most of the commodities in daily use. and the sales tax would, like the Customs tax, be tantamount to a form of income tax tbe wrong way.

'Tf goods were exposed for sale showing the cost price and the duty separately there would he revolution. To protect himself from charues of profiteering the trader in 6oif-de.fence will have to display the ordinary selling price and the sales tax apart.

LIMITING THE OUTPUT. "According to its extent it will naturally have the effect of all increases in the prices of goods of limitin_ the output. It may reduce buying on the part of the public, and a consequent reduction of orders for the manufacturers. The result would be more unemployment and a loss of revenue to the Government. There would be a further fundamental objection, in that the services and privileges conferred by the Government are not dependent on the size of a citizen's purchase from a shopkeeper

•'The business community should look at this possible tax very carefully and not burn their finerera."' added Mr. Fowlds. "The possible relief by a reduction in the income tax rate may be more than off-set by the many disadvantages which a sales tax would produce. If this is groin? to require more Government and 'aver office staff, what gain in economy will it be to the country and the business community?"