SALES TAX

Evening Post, Volume CXV, Issue 38, 15 February 1933, Page 9

SALES TAX

NEED FOR REVENUE

MR. CGATES'S DEFENCE

MORE EXEMPTIONS MADE

BOOKS AND EGGS

The debate on the second reading of _ the Sales Tax Bill—a debate which promises to run into several days—was initiated in the House of Representatives last evening by the Minister of Finance (the Right Hon. J. G. Coates). The Minister defended' the new imposition as the most reasonable in the circumstances, and said that the revenue which it would bring to the Consolidated Fund was urgently needed. Mr. Coates announced a further list of exemptions from the tax, the most important items being books and eggs. Mr. "Coates said that the Government took no delight in bringing forward the"measure,} but: stern necessity demanded that the Government should do its utmost to meet its obligations and remain .solvent. He thought that the measure could be accepted by the House as^a reasonable method of raising taxation. : Mr. Coates: paid a tribute to the commercial community for the manner in which it had accepted the.increased "imposts.'.. The Leader of the Opposition (Mr. H. E. Holland)' asked if the Government intended that the, legislation should be,permanent. "We regard it as permanent so far as the present crisis applies,'' said-Mr. Coates. "I" can say no more, and I can say*no less". It can't be expected that Parliament should lay down hard and fast rules." A'IrnNIMTJMOF INCONVENIENCE. "Everyone will recognise that there must -at first be many points upon which decisions will be required before business can be "carried on with the usual smoothness and expedition, "said Mr. Coates, '' but I am confident that with the good-will that has been shown by all sections of traders a satisfactory solution of the difficulties will be found. - I can assure the House and others interested that the Government for its part will do its best to reduce to a minimum any inconvenience that may be"; caused to those who are carrying on the commercial business of the country.: As- would be expected, conferences of those interested are continually taking place, and it will probably be necessa.y before the Bill is considered in Commitee to make certain alterations therein to assist the smooth working of the.measure. I am not yet in a position "to; give details jof the possible alterations, but will do so at a later date. , : "Although the sales tax was new in New Zealand," it had been in force,in other countries for some years. A sales tax. was ;fir_t introduced! into Canada in 1920 and into 'Australia in 1930. According to the information in his possession,, besides these two British,countries, a sales tax: was now/ levied in the following foreign countries:—Austria, Belgium, Bolivia,' Brazil, Chosen (Korea),, Cuba, Czechoslovakia, Danzig; Ecuador, France, Germany, Hungary, Italy, Yugoslavia, Luxembourg^ •Mexico^ Monaco, Persia, Philippines, Poland, .Porto Rico, Rumania, Soviet Eussia, and .Turkey. ; ! OPERATION IN AUSTEAIIA. "Beference has been made to the fact that in" Australia it took 18 Acts to bring the sales tax into force, and that there have since been many amendments," continued the Minister. *>-No doubt the Australian Government adopted the system which best suited the conditions obtaining there and which accorded 'with the constitutional position. T: am advised that' there were nine Acts setting up the machinery and a .further nine' Acts imposing the tax. Of the nine sets of Acts four dealt with goods manufactured in Australia, four with goods imported into Australia, and the other with leased goods. .So that the" position may be clearer; the following are the preambles to the Acts dealing with goods ' manufactured in Australia:—" '. (1) An Act relating, to- the imposition, assessment, and collection of a tax upon the sale value of goods manufactured in Australia' and aold by the manufacturer or, applied to his own use, and for other purposes. (2) An Act relating to the imposition, assessment, and collection of a tax upon the sale value of goods manufactured, in. Australia and sold 'by a purchaser from the manufacturer, and for other purposes. 1 (3) An Act relating to the imposition, assessment, and, collection of a tax upon the; sale value of goods manufactured in' Australia and sold by a person not being either the manufacturer or a purchaser from the manufacturer, and for other purposes. (4) An Act relating to the imposition, assessment, and' collection of a tax upon the sale value of certain goods manufactured in Australia and applied by the purchaser to his own use, and for other purposes. . "The four Acts dealing with imported goods are somewhat similar. It will be seen, therefore, that there is no similarity between the position in the Commonwealth and New Zealand, where the matter is to be dealt with by one. Bill." WHEN SALES TOOK PLACE. Proceeding to an explanation of the clauses of the Bill, Mr. Coates said it would be noticedthat the term wholesaler included a manufacturer who was not a manufacturing retailer, and that a sale included barter, the disposal of goods with the right of purchase,; and the delivery of goods under any condition as to future payment. Some question had arisen in dealing with goods concerning which contracts of sale had been entered into by wholesalers before I ebruary 9, the point being whether the goods were or were not sold before February "9. If they were so sold they were exempt from sales tax. On the other hand, if the sale took place after the date mentioned the tax was payable. His view was that the only satisfactory way of dealing with the ques-tion-waa to accept the distinction indicated in section 3 of the Sale of Goods Act, 1908. That provided that where under a contract of sale the property in the goods was transferred from the seller to the buyer the contract was called a sale, but when the transfer of the property in the goods was to take place at a.future time or subject to some, condition thereafter to be fulfilled the contract was an agreement to sell. COLLECTION OP TAX. Dealing with the clause empowering the Minister to divide the Dominion into districts for the convenient collection of the tax, Mr. Coates said that as. members were aware collectors of Customs who would be the collectors of sales tax were stationed at the ports and as such had jurisdiction over the area within the limits of those ports. For the purposes of collecting sales tax it was necessary that they should have jurisdiction over the area and district of- which the port was the principal distributing centre. For example, a merchant in Mast.erton, or Hamilton would have to account for skies tax

payable, by him to the collector at Wellington or Auckland, as the case might be. THE SALE VALUE. Reference was made by Mr. Coates to the clause which sets out the way in which tho sale value is to be determined for the purposes of salos tax. "In the case of goods sold by a wholesaler to a retailer tho sale value is the price' at which the good's are actually sold," said Mr. Coates. "In other cases it is the estimated wholesale value. In the ease of goods manufactured by a manufacturing retailer the sale value is the value at which the goods would be sold to a retailer. The object of this provision is to place goods made by manufacturing retailers as nearly as possible oh the same footing as those sold by wholesalers. In the case of goods imported, by retailers (including manufacturing retailers) the sale value is the sum of , the value for duty of the goods in New Zealand currency and the duty payable. In addition, 20 per cent, is added to that sum: I may say that there is some' doubt whether this provides an equitable, basis for taxation purposes as between the wholesaler and retailer. I am having the matter looked intof and hope to place the position before the House at a later date. This clause also contains a provision enabling the sale value to be determined in abnormal circumstances and conditions." A clause in the Bill gave general power to make regulations for the purposes of the Act. Those regulations were at present in course of preparation, and it was hoped to issue them as soon as possible after the Bill was passed and opportunity had been afforded! to the commercial community to be consulted as to the nature of the forms which," while giving the necessary information, would best accord with commercial practice. MORE EXEMPTIONS. • -.-.-Pressed by seyera.inembers to give a list of further exemptions which the Government had decided to grant, Mr." Coates said that these were not yet completed, but he could give some of the items which the: Government had already decided to exempt. Mr. J. A. Lee (Labour, Grey Lynn): Are exemptions being given away in Teturn for votes? , Mr. Speaker: Order! Order! Mr. Coates then gave the following list of items which the Government had decided to exempt:— Books * Box strappings.' Carbonettes and briquettes Dairy vats .'''., Egg PulP> preserved eggs, and eggs Hay-making implements Meat meal and bone meal Nails, (cement-coated) ■Malt,-' :■--/■' Wrapping paper . - ' Meat wraps ' - ";! < Parchment paper: .Yeast-Fishing-net twine. . ' .REVIEW URGENTLY NEEDED. Mr. Coates said the House Avas asked to accept the Bill as nearly as possible in. the foTm in which it was submitted. The revenue that would be raised as a result of the Bill was urgently needed by the community. "I have had many suggestions' and many, alternatives submitted to me," said the Minister, "but I am bound to admit that this method spreads the burden more equitably than any otter." - - Turning /his attention to the criticism of the Opposition, Mr. Coates said that if the Labour Party were occupying the Treasury benches at the present time it • would ■-be ■ faced. witl. a much more formidable task than that confronting the present Government. The Government was much more economical in the management of the country's affairs than the Labour Party wo.uld be. (Loud Labour laughter.) ; Mr..R. Semple (Labour, Wellington East); And he never blushed. The country, said Mr. Coates, could rest assured that the Government would not be imposing fresh imposts were it not for the fact that the Government took a pride in the country and was bound to keep it solvent.. "I know that the • impost will bear heavily on the people,", he said, "but from what can be learned of other countries New Zealand is the .happiest country in the wide world today. I know that there are groanings,: but our little country is the best of the lot, and I think our people . compare,. favourably with any others."' .;. ;a Labour member: Then why copy the legislation of other countries? Mr. Coates said; that tho Government was up against an unreasonable opposition, but so far as he and the Government were concerned he made .no apology for what had been done. They asked the people to st_nd up to what was required; of .'them! and to bear; the burden cheerfully. v