THE SALES TAX INCREASE

Press, Volume LXXVI, Issue 23058, 28 June 1940, Page 6

THE SALES TAX INCREASE

Explanation By Minister DISCUSSION IN THE HOUSE [From Our Parliamentary Reporter.] WELLINGTON, June 27. A detailed explanation of the doubling of the sales tax to produce an ad T ditional £2,000,000 during the balance of this financial year for the War Expenses Account was given by the Minister for Finance (the Hon. W. Nash) when the resolution necessary to effect this change was before the House of Representatives to-night. The Minister said that foodstuffs produced in New Zealand were not subject to the The resolution states that sales tax of 10 per cent, will be payable, with certain exemptions, after to-day on all goods sold by a wholesaler, otherwise than to a licensed wholesaler for resale by him, on all goods manufactured by a manufacturing retailer for his own use, or for sale otherwise than to a licensed wholesaler for resale, and on all goods imported into New Zealand and entered for home consumption, otherwise than, by a licensed wholesaler for sale by him. The Minister explained that the new tax was payable on all goods subject to the present tax, with the same exemptions as before. Drugs, industrial machinery, and most farming requirements were exempt. The present discount of 5 per cent, of the sales tax granted to payers would be reduced to 2i per cent, with the increase of the tax to 10 per cent., as the higher tax did not cost any more to collect, and the people ' who did the work would receive exactly the same amount in discount. _ “All goods imported into the Dominion before midnight to-night, including those in ships alongside wharves, will be subject to the old rate of 5 per cent..” Mr Nash said; “but all goods arriving after to-night will be taxed to the extent of 10 per cent.” ' „ , Mr J. A. Lee (Democratic Labour, Grey Lynn) said that while an increased sales tax had been levied in Britain, there had been also set up there .an Arbitration Court to effect an upward scaling of incomes. New Zealand’s increased tax, however, was being levied side by side with a provision to reduce incomes. “Sacrifices alone will not win the war.” Mr Lee added, “and if we are taking something from New Zealand industry that will tend to cripple family life, without helping to hit the target, it will prevent the good feeling necessary to help win the war. We are hitting the humblest from both angles, and making the woman in the home pay more for children’s clothes and shoes will not help to win the war. Suggestion by Mr Coates The Rt. Hon. J. G. Coates (Opposition, Kaipara) asked the Minister to ednsider the possibility before a bill was introduced, of collecting the sales tax, not at its source, but when 4he article was actually retailed. It was an important point, because with the tax being applied at the source, and cost charges and profit being added afterwards, the cost of the article was correspondingly increased. He admitted that the present system of applying the tax had been a weakness all along, and said it would be interesting to know what effect the change he suggested would have on the actual cost of an article. Replying to Mr Lee, the Minister said there was nothing that could be made in the Dominion that the Government would not facilitate with finance and in other ways. “We don’t live on money, but on goods,” he added, “and to the extent that we expand our production of goods here, less what we send to the Old Country, they will be available right to the limit. There will be no shortage Of food here, and it would be entirely wrong if we retained luxury supplies here while they were going short in the Old Country. <‘We must pay for the war as we go on,” Mr Nash said, “and there is nothing else to carry on with but the goods produced before or during the war.” Mr Lee; But there are ways of paying for them. ' “You can pay for it later; but you are only postponing the evil day,” the Minister replied. “If we trespass on the United Kingdom’s goods and services for the equipment and feeding of our forces, we are taking'something away from the people of the Old Country.” The Minister said he would be pleased to look into Mr Coates’s suggestion; but he believed it was almost impossible to collect the tax in that way. Personally, he thought it was best to collect the tax at its source. The resolution was passed.