SALES TAX

Evening Star, Issue 21077, 14 April 1932, Page 12

SALES TAX

THE GOVERNMENT'S PROPOSAL PROBABLY 21 PER CENT. [From Our Parliamentary Reporter.] WELLINGTON, April 14. It is now practically certain that the sales tax, which the Government proposes to introduce in legislative form, will follow fairly closely tho lines of the New South Wales system, a charge being imposed at the source—between the wholesaler and the retailer. The amount of the tax is likely, to be 2)- per cent., and it will not bo surprising if a considerable range of items, including foodstuffs, is exempted. Mr Coates will be in charge of the Bill. The tax will be subject to separate legislation, and will not be included in the Finance Bill. Tho reason is that it involves tho authorisation of special collecting machinery of a typo not previously required in New Zealand, and the inclusion of the widest powers to discriminate between items which Could fairly carry a heavier impost, and those which represent everyday necessaries. Two aspects which tho Government will have in mind are the cost of living and an endeavour partially to make up the serious decreases in the Customs revenue. Elasticity will be the keynote of tho legislation. ' In reply to a question this afternoon, Mr Coates said it was still uncertain whether the Bill would be introduced to-morrow.

As a matter of guidance in the framing of its legislation, the Government does not lack precedents in the imposition of a sales tax, although the experience in those countries where it has been tried may not have supplied a suitable test to enable the effect of such legislation in New Zealand to be gauged. In 1918 Germany imposed a turnover tax, which yielded up to 36 per cent, of the total revenue. In 1920 Canada, France, and Czechoslovakia followed her example, and in the following year the same form of taxation was accepted by Belgium, Italy, Hungary, Rumania, and Russia. Austria and Poland followed suit in 1923, and Turkey in 1925. In the main these were turnover taxes, applicable to all transactions. The earliest use of a sales tax in the British Empire was Canada’s experiment, and New Soutli Wales adopted legislation on the lines of that of Canada as part of its revenue-keeking crusade in 1930. Canada first imposed a multiple tax, amounting to 6 per cent., but this was subsequently reduced more than once until finally it rested at 1 per cent. The Australian charge is a tax of 2£ per cent, on the sale value of (1) goods manufactured in Australia and sold by the manufacturer or dealt with by him otherwise than by sale; (2) goods manufactured in Australia and sold by the purchaser from the' manufacturer; (3) goods manufactured in Australia and sold by a person who is not the manufacturer or a purchaser from the manufacturer; (4) certain goods manufactured in Australia and dealt with by the producer otherwise than by sale; (5) imported goods; (6) goods imported and sold by the importer; (7) goods imported and sold by persons other than importers, etc. In the enacting of the legislation no fewer than nine Bills were introduced. Exemptions were provided for, and the tax operated as from a specified date. It is gathered from inquiries in official circles that the utmost care will be taken in the legislation to see that the cost of living is not increased so far as necessaries are concerned. In addition to foodstuffs in common use, agricultural requirements are likely to bo included in the list of exemptions. One Minister, discussing the projected legislation, remarked that within suqh Bills the schedule of exemptions invariably outweighed considerably the list of items subject to the tax.