SALES TAX STORM.

Auckland Star, Volume LXVI, Issue 99, 29 April 1935, Page 14

SALES TAX STORM.

SECOND-HAND GOODS.

PROTESTS IN AUSTRALIA. MINISTERS COMPROMISE. (From Our Own Correspondent.) SYDNEY, April 23. Cynics have been amused a,nd citizaus who take public morality seriously lia*e been amazed and disheartened by the attitude of the Federal Government toward its Sales Tax Bills.

The trouble arose over the attempt of the Federal authorities to collect sales tax 011 second-hand goods. Toward the end of 1932 dealers in second-hand machinery, motor cars, and other goods were called upon to register and pay sales tax, and they were instructed to send in returns covering sales as far back as August, 1930. Some of them paid, many ignored the demand, apparently with complete impunity, or paid after long delays under official pressure; and at last one more obstinate or more courageous than the rest appealed to the High Court for protection.

Last December the High Court, by a unanimous decision, declared that second-hand goods did not come within the scope of the Sales Tax Act, and that therefore all taxes under this head had been illegally collected. It might have been expected that those who had paid the tax might now have some reasonable expectation of seeing their money back again.

But that was not the Federal Treasury's point of view. Mv. Casey, the Assistant Treasurer, announcing bluntly that the Government could not think of surrendering the £2.30.000 that it had gathered in under an illegal pretext, informed an astonished House that he would at once bring dywn three bills covering the whole ground.

These measures provided that no sales tax on second-hand goods would be imposed in future, but that all taxation collected on such sales before the High Court gave its decision would be retained by the Treasury. It is true that provision was made for a refund, if the plaintiff could succeed in ail action for recovery brought against the Commissioner of Taxation, but this concession was so hedged about with restrictions as to be practically worthless. But Air. Casey was evidently quite in earnest about these bills, even going so far as to warn the House that if members would not accept them, or tried to make trouble, he would impose the sales tax on all second-hand goods in due legal form.

Popular Denunciation. It is no exaggeration to say that no single action by the Federal Government during the past year has produced such a widespread storm of protest and denunciation. In Parliament Mr. Scullin made a strong attack upon the Treasury, reminding the House that though legislation may make an illegal tax legal, it cannot make an inequitable measure just. He pointed out that the sales tax had been collected only from registered sellers of second-hand goods, while the unregistered dealers got off scot free. Worse than this, those who had paid the tax had been and were to bo unjustly penalised while those who flouted and defied the law were to escape without loss. It was a vigorous indictment, and it secured strong support in the House, no less than eight U.A.P. members declaring their determination to back lip: the Leader of the Opposition. Outside Parliament the agitation was even more menacing. Strongly worded letters attacking Mr. Casey and his bills appeared in all the newspapers. Mr. J. A. Gunn, one of our most distinguished accountants, declared that there could be no excuse for the attempt to evade the High Court's judgment and to legalise its own errors. He agreed entirely with Mr. Scullin that the new bills condoned unfair discrimination, in favour of the unregistered dealers and of the dealers who had all along refused to pay the tax; and he argued, further, that 'the Government's decision not to maintain the tax clearly established its iniquity, destroying the Government's right to bring down validating legislation to save the spoils.

Taxpayers' Protest. The Federated Taxpayers' Association of Australia issued a strong protest against the Treasury's attitude, Mr. McKellar White, its president, expressing the organisation's regret that Mr. Casey's refusal to refund the illegally collected taxation had been based on the simple but sordid argument that "it would embarrass the financial estimates for the year."

The "Sun," under the heading "Second-hand Morality," criticised the action of the Federal authorities with most unusual severity, suggesting that "it is necessary for the sake of good government that the people should be able to trust in the honesty and justice of the Government that they have elected,," and arguing further that "there is a very grave probability that a Government which acts oppressively in its taxation of one class will not be too scrupulous in dealing with all the rest."' This vehement agitation reached a climax when a few days before Parliament closed an extremely influential deputation waited on Mr. Casey at Canberra and proceeded to "have it out" with the assistant-Treasurer face to face.

This deputation was headed by Mr. McKellar White, president of the Federated Taxpayers' Association, who told Ml*. Casey plainly that "the retention of this tax, illegally collected, is a direct abrogation of all the rights the taxpayer is supposed to possess." The other delegates represented the taxpayers of Victoria, South Australia and Tasmania, the Chartered Accountants, the Sydney Chamber of Commerce and the Xew South Wales Chamber of Manufacturers, and they followed Mr. McKellar White's lead with a frankness and force that must have surprised Mr. C'asev.

The assistant-Treasurer made a rather unfortunate reply, remarking among other things that "Government could not allow the law to be 'punctured' by judgments of the High Court." This attempt at bluster was clear proof that Mr. Casey was not sure of his ground; and under the pressure of these strong attacks, and in face of the menace of defection in their own ranks. Ministers decided tardily and grudgingly to reconsider their position.

j Sales Bill Amendments. ' Their second thoughts materialised next day in the form of certain amendments to the Sales Bill. These provided that the amount of paid tax would be refunded to persons who could prove that they had not "passed on" the tax to purchasers, and that they had paid . the amount due within one mouth after I sale.

The eight U.A.P. "rebels'' who had evidently been admonished by Dr. Earle Page admitted that they were satisfied with these remissions. But Mr. Scullin justly pointed out that many who had not paid the tax promptly had not meant to defy the law, but had doubted' the legality of the Act and waited to see it tested; and those who paid later are now treated worse than the defaulters who refused to pay at all. But the session was near its close, the House was getting impatient, and so with these half-hearted concessions the bill went through.

Mr. Casey says that Government will lose "a great deal - ' of the £250,000 which it had illegally collected. But many people take leave to doubt it, and the whole incident seems to have left an unpleasant taste in everybody's mouth.