SALES TAX

Evening Post, Volume CX, Issue 36, 11 August 1930, Page 12

SALES TAX

KNOTTY PROBLEMS

PASSING IT. ON

V "Evening Tost," l.Hli August. '[' .Announcement was made in "The Tost" !on Saturday to the effect that the Australian Federal Senate had passed the second reading;of the Sales Tax Bill. Precedents for a sales tax were furnished by Trance and Canada. In short, -with certain exceptions' 2& per cent, -will be collected by way of tax on all sales of goods. The vendor is responsible for collection ot 'the tax;,'and he will-hnve'to account tor it to the; Government. ■ • , -Already difficulties are foreseen id its collection, .and. for the present, at any rate,''he generaiy adds 2% per cent, to "the foot'of all sales' invoices to retailers. But in. some cases the -position's subject 'to review in October, or at the end ot the year. '■''•' ' Exports of New Zealand produce to Australia will have to pay. lhe"2 1/fe..per cent, jittirs tax on passini; ..into Australian Ketailers maintain that lhc .payment of the sales tax is the definite liability ot inevehant and manufacturer, me reply -to tlria was the addition of the 2% per cent, to -the'invoices, 'and ■'subsequently, in many cases merchants have increased the selling price of their goods by a sum sufficient to.', cover the sales tax on the fcross amount calculated before deductions Vrf1 cliscounts:'or' customary'■ trade vebates -.The increase in the price.of goods aftected .■will amount to some 3 per cent. The adoption of" a uniform practice by manutac/'turefs, wholesalers, and retailers will eventually, it. is- believed, correct the i-haotic. state of. affairs existing in busi*ncss circles.BONDS TO BE GIVEN. • Boncls amountirtg to .it',least £25 and hot more than £1000, most be entered Snto: •by manufacturing and wholesale -Sims. Importers, merchants, and manufacturers- must register. _ -Hire-purchase sales by registered persons (i.e., persons who are . manufacturters and wholesalers required by the Act -to be-registered) are taxable on the full kale price, at the time of the contract for the hire-purchase sale. Tax is payable '••during'the'month following the month in-wfiif-h the sale is made. ' . y Where-goods are sold at a price which includes sales tax the vendor will not be required-' to pay sales tax on the total Wice,. which includes sales tax. In. such bases'the department will regard the Amount of sales tax to be accounted ioi liv the vendor to be a traction of -the •total price recoverable from the purchaser, *hV numerator of the fraction being 2.a, and the denominator 102.5.

RETAILER-MANUFACTURERS. ' Retailers who manufacture any of their linos -must,pay sales tax on the price for Vhicli those lines are sold retail. ' Where the relations between a legalijinVleperident manufacturer or . ■wholesaler and a retailer are such that: either . substantially ..-controls the other,.sales tax is payable in respect of goods sold pr transferred by.'the manufacturer or wholesaler to the retailer, on the value which, m ithe opinion of the Commissioner, would be the fair market value of the goods v.hen sold by, that manufacturer or wholesaler fir the ordinary course of trade. . ■ When goods are sold in bond to a retailer or direct to the public at a price, not including duty, the vendor » .liable for sales-tax on his actual sale price,, phi* the duty. . ... .. '

THE CANADIAN PRECEDENT. Comparisons between'-the Canadian ami Australian sales taxes are drawn by Mr 1. R -Vshworth, president of the \ietonan iKmployers' Federation, in a report drawn »p for his executive. "The burden of the tax administration upon ■■ the Canadian manufacturer is evidently heavy, the lerjort states, "but he is free irom compulZovV arbitration. The Australian manufacturer will, have to carry both if the Government proposal becomes I aw., Uie Canadian manufacturer can look forward 1o the abolition of the sales tax in the near future. Starting at 1 per cent., the ■tax-was increased gradually to 6 per cent. It is now back to 2 per cent. ' -'The circumstances "» which the sales tax was. passed in Canada m> 1920 differ entirely from those of Australia to-day. In - Canada, concurrently with, the adoption of the sales tax, the excess profits tax was abolished and sharp reductions .were made in the income tax. The sales tax was regarded as less burdensome on industry than the' taxes displaced. But in the proposed sales tax y, ill not be a substitute, it will be an addition. A.nd it will not bs the only addition; there are to be other increases- ior State, as well as for Commonwealth needs. Australian" industry' is already in a critical condition through over-taxation. Can "it'stand up against these further? burdens? 'Should not the £3,000,000. which it is proposed to raise by .the sales tax, be saved through retrenchment? •