RISE INEVITABLE

Evening Post, Volume CXV, Issue 40, 17 February 1933, Page 8

RISE INEVITABLE

COST OF LIVING

LANDING CHARGE DOUBLE

MERCHANT'S FIGURES

A leading Wellington merchant has supplied to "The Post" a most interesting comparison of the relative costs of a standard article—an essential article in ready demand, imported from England—as .in February, 1929, when the exchange rate stood at 15s per cent., in May, 1932, with the rate at 10 per cent '■; and a surtax of 9-40 on the duty, and-today, with the exchange rate . increased by the Government by 15 per cent., plus sales tax. The figures require little comment, he remarked; for they speak plainly enough of themselves. The Hon. E. Masters has stated that the high rate of exchange will not bring about an increase in the cost of living. I say that the Minister is entirely mistaken; an increase in the cost of living is inevitable, and the public, ' if it has any doubts or hopes on that score, will unfortunately have the fact convincingly impressed upon it. The figures are taken put on this firm's standard costing methods, and have been carefully checked to ensure absolute accuracy. The examples are as follows:— . ." EXAMPLE •■A.February, 1920— Actual price paid In England Tor Roods 18a 6d, exchange at 15s per cent., duty 25 Dor cent., and 1 per cent, primage. Pence. Pence. Goods 222 ">•>•> Plus 10 per cent. ..' 22.2 ""'. 25 p.c. duty " ■" ~ 61 . 05 1 p.e. primage 2 442' Freight, insurance, cases, etc., 7»/ a p.c 16.65 Exchange 15s p.c 1.7898 Actual landed cost of goods—2ss 4d Retail price, say, 37s 6d. Landing charges^-36.93 p.c. of English price. . EXAMPLE "B." May, 1932— Actual price paid in England for goods 17 S snowing reduction of Is 6d on price paid In example "A." ■ . Exchange at 10 per cent., duty 25 per cent, plus surtax 9-40 of. duty.: „ . ■ : . Pence. Pence. £°ofe • 204.0 204.00 Plus 10 per cent 20.4 •224.4 25 p.c. duty 56.1 : Surtax ...........,i... I** 6225 Freight, insurance, cases, etc., at Xy, p.c 15.3 Exchange at 10 p.c .... " 21.93 ' . " 309.9525 Actual landed cost of goods—2ss 10d. Retail price,- say, 38s; 6d. Landing charges, 51.96 p.c. of English price. used In calculating duties. EXAMPLE "C." February, 1933— Actual price paid In England for goods, 17s; exchange at 25 per cent., duty 25 per cent. ' . ' ' : Pence. g°<"Js 204.00 Duty 561 Freight, Insurance, cases, etc., 7% p.c 15.3 Exchange at 25 per cent. 54.825 Sales tax 19.1862 349.4112 Actual landed cost of goods, 29s i%d, Today's retail price, 43s 6d. Landing price, ■ 71.323 p.c. of English price. NO BENEFIT FROM LOWER HOME PKICES. It would be seen from the three sets of figures, the-merchant remarked, that though. English prices had fallen, the New Zealand customer, while gaining a little by that fall, had lost far more by the tremendous increase in. landing charges brought- about by exchange and sales tax burdens. Sinca February, 1929, the .landing charges had almost doubled, rising from 36.93 per cent, of the cost of the article in England to 71.323 per cent. .•.- ---: There is another point (ho said) which is of first importance to tho purchaser.—quality is falling; manufacturers are degrading their goods. The reason is- simply that high ex-; change and. duties increase .the! cost* : of, raw materials till the 'manofac-' turer—knowing that the ultimate purchaser can pay. only so much--is forced to' buy raw 'materials of a lowej grade. That is abundantly , true of many articles manufactured in Australia, particularly apparel and footwear, and it is true of certain ■ articles in. New Zealand. Goods in certain lines imported from England show that the trend is general. The consumer of these goods is twice stung—he pays' more and he gets less quality. .' SALES TAX ON EXCHANGE, Particular attention was drawn to the item of sales tax in Example C. The original sales tax proposal, as brought down by the Ways and Means Committee, said the raurehant, would have operated less harshly upon the purchaser,' in that it did. not suggest that the sales tax should be loaded also in respect of exchange, but during the stages between the submission of the original proposal and the drafting of the Bill a provision had been slipped in to the/effect that the value of the goods "in New Zealand currency" was. to be employed in. calculating the amount of sales tax to be paid, which meant that this tax was being loaded in respect of exchange where imported goods were concerned. There had been published recently a series of. comparisons in a discussion of sales tax problems, but in those comparisons the fact that the tax had to be levied upon the value "in New Zealand currency 3' was overlooked. As an accurate statement/of the position, therefore, the figures were of little value. • The details of the calculation which fixed the sales tax-at 19.1862 don the particular article were as follows:— ■ Pence. goods 204.00 Exchange 51.00 255.0 TlO per cent, ad valorem 25.5 Duty , - 56.i ... - . 336.6 t2O per cent. 67.32 Sales tax, 5 per cent, of 403.92—20.196. 88 5 Per cent, for promuft payment— 19.1862 pence. There wa,s a possibility, the merchant said in conclusion, that some readers might be.a little confused by the fact that the English price had varied as between Example A and Example C, but the percentages of landing charges to the original English price of the article, of course, remained true irrespective of English price. ' "The main point is dear," he added, 'that the retail price of this and other English goods has.risen approximately 15 per cent, to the New Zealand consumer."