Rattrays supports V.A.T.

Press, 28 November 1980, Page 8

Rattrays supports V.A.T.

Support for a value added tax (VAT) to replace the ’ present system of sales tax < has come from the chairman t of a leading wholesaling 1 company. ' i The chairman of J. Rat-1 tray and Son, Ltd. (Mr A. | W. Barnett) told share-j holders at the annual meet-'I ing in Christchurch yester-u day that sales tax at the moment is unjust and based' ;on a “scatter shot” ap-p proach. He said sales taxes, ranging from 10 to 50 per cent I on a wide variety of prod- ' ucts, discriminated between different sections of the | trade. ! Non-licensed wholesalers i and chain stores could apply the tax to the cost of the < product from the manufac- i turer. but licensed wholesalers had to add theirs 11 after their margin. i

This could be toleratedu when only a small number’;: of goods was involved, but t the amount of tax being collected had reached a stag-1 ■gering figure, he said. I “In September this com-p pany collected $545,000 ini] sales tax and it is likely to;: ’be $6.5 million for the;l wear,” he said. P “Of the total tax collected] •from all sources, sales tax]; could be in the order of 18 ] iver cent.” Mr Barnett said that the : time had come for a shift to ; real indirect tax, such as : VAT, and it must be accompanied by a reduction in personal, "company or direct taxes. "If a VAT tax of 10 per : cent was applied to consumer goods and services this would reduce direct tax jby 27 per cent,” he said. i It would also give the .

i company an immediate ’ I $250,000 extra for mainten-l ance and expansion. Mr Barnett said that alii companies, and not those fust involved in exporting, needed incentives to increase i productivity, and that . efficient industries should not have to pay an unfair share! iof the tax burden. I In advocating VAT, he isaid that it should be spread lover the widest possible base so that it would minimise the rate necessary to yield the desired level of revenue. Turning to the company’s present trading, Mr Barnett said sales were continuing at a satisfactory level and profits were up to budget The annual balance date would in future be August 31, compared with the present closing off date of July 31.