SALES TAX

Evening Post, Volume CXV, Issue 80, 5 April 1933, Page 9

SALES TAX

EFFECT ON COST OF GOODS HEAVIER THAN IMAGINED

The imposition of 5 per cent, sales tax on goods appears in the public mind to be associated with Is extra on the price of an article sold over the counter for £1, or 6d more on one costing 10s. As a matter of fact, the sales tax comes to very much more, and its onerous character is only now beginning to be realised. Moreover, the tax has como at a time when, owing to the greatly decreased purchasing power of the public, business in any case is exceedingly hard to do. Importers must take all charges into consideration, and the sales tax, therefore, has to be provided for when the goods are costed. Taking the retail drapery trade as an instance, the head of a- firm doing considerable importing has had details of the effects of the sales tax brought out by an accountant with the object not only of ascertaining the cost of the' goods to the firm but alsoof indicating' to the public that the sales tax will inevitably mean very much more than Is in the £ when the goods como to be sold retail. Tho detailed, statement -referred to is as follows:— Duty p.c. £ s. d. 3* Free goods 3 6 0 Sales tax " 8 7 3 Total 11 13 3 10 Foreign goods 11 0 0 Plus 22Vz per cent :. 2 9 6. 13 9 6 Sales tax 8 19 3 Total 22 8 9 li> Foreign goods 1G 10 0 Plus 2214 per cent. ...... 314 3 20 4 3 Sales tax .'. 9 7 5 Total .'. 29 11 8 20 British goods 22 0 0 Sales tax 0 9 5 Total ' 31 9 5 25 British goods ... 27 10 0 Sales tax 0.15,11 Total , 37 5 11 27% British goods 30 5 0 Sales tax ......♦>.*..>......'. 9 19 2 Total ~.v..... 40 i 2 30 Australian goods ......... 33 0 0 . Sales tax.. 10 2 7 Total ;.. 43 2 7 35 'British goods 38 10 0 Sales tax 10 9 0 Total 48 19.. 0 37% British' goods 41 5 0 ..Sales tax 10 12 3 Total 51 17 3 45. Foreign goods . 49 10 0 Plus 22% par cent 11 2 9 . 60 12 9 Sales tax 1115 3 Total 72 8 0 50 Foreign goods ...' 55 Q 0 Plus: 22% per cent. ...... 12 7 0 07 7 6 Sales tax 12 3 3 '. Total 70 10 9 60 Foreign goods, -~. 6G 0 0 Plus 22%. per cent. ...... 14 17 0 SO 17 0 Sales tax ; 12 19 3 Total 93 16 3 *Primage on duty-free goods. " The above percentages of duty and sales tax are based on £100 worth of goods. Although the duty may be free, or 10 per cent, ad valorem, as the case may be, 10 per cent, has still to be added to the value of all goods—duty free or otherwise —when they arrive in New Zealand. A typical instance, taken at random from the books of the company, was a case of goods from London. The invoice price was £89, landed costs were £31 14s lOd additional, and on top of this the duty of 25 per cent., together with sales tax bringing the cost of landing the goods, duty and sales tax combined, up to 72 per cent, on £100 worth of goods. There were other instances of even over 100 per' cent, where the duty on the goods was higher than the example quoted of goods carrying 25 per cent. duty. ..

Nor are these accumulated charges all. On a line of goods costing, say, £1000 in London; 25 ■ per cent, extra lias to be provided to pay for them, i.e., £1250 in London; and in "addition to this extra cost of the goods in themselves exchange has to be paid' on the buying commission (2% per cent.), shipping freights, and all other incidental charges, bringing the extra cost necessitated by raising the rate of exchange to 25 per cent, up to between 30 and 31 per cent. This is additional to the Customs duties and sales tax. Therefore, the New Zealand importer requiring to pay for £1000 of goods from England will have to provide for £1300 in New Zealand,. additional to the duty and sales tax, amounting to £22 8s Od per cent, should the duty on the goods be at the rate, of 10 per cent, ad valorem.

But examples can also be quoted by the drapery trade of a. simple necessary line like flannelette, admitted duty free, costing as much as 60 per cent* on the original cost to land.