DEARER DEER

Evening Star, Issue 23354, 25 August 1939, Page 12

DEARER DEER

DENIAL THAT PUBLIC BEING EXPLOITED INCREASED TAXATION STATEMENT BY LICENSED TRADE A denial that the licensed trade was exploiting the public in passing on to the consumer the increase in the excise duty on beer and that additional profits were being made as a result was contained in a statement made by Mr M. J. Walsh, secretary of the Auckland provincial council of the licensed trade, who stated that the trade, in both wholesale and retail branches, had no alternative but to transfer the new impost to its customers. “ I am sure that a proper appreciation of the true position and the factors which created it will remove any misconceptions now existing and satisfy consumers that they are not being exploited under the price adjustments,” said Mr Walsh. “ Though the trade does not desire or intend to be inveigled into a public controversy,” Mr Walsh continued, “ it feels that it is entitled to submit its case conclusively, and to leave it to the public to make an impartial judgment on the correct facts. Members of the trade in Auckland are at a loss to understand why a section of the trade union movement has, for no valid reason, sought to apply direct actionist tactics against consumption of beer in city hotels. “ The right of the individual to determine exclusively whether he shall buy a commodity, and where, cannot be challenged. However, there can be no justification for organised attempts to dislocate trade hv the application of a boycott, especially when the circumstances call for a reasoned analysis of the actualities and an intelligent recognition of the deductions from them. It is essential, therefore, that all the facts relative to the adjustments made in the price of beer be carefully weighed before a final conclusion is reached. EXPLOITATION CHARGE.

“ Tbe charge lias been made that the licensed trade is exploiting the beerdrinking public in the process of passing on to the consumer the increase m the excise duty of sixpence a gallon on beer. Indeed, in some quarters this belief is said to be the reason for the threatened boycott. This impression is erroneous. The trade emphatically denies that, in the adjustment of prices, it is making, or, for that matter, can make additional profits. “It can demonstrate conclusively that, in passing on the_ tax, far from securing an extra margin of profit, it actually is unable to maintain the same ratio of profit as was returned before the rise in price to the consumer. Those who claim that unfair advantage is being taken of the situation have forgotten that the industry is subject to the operations of the legislation governing variation in prices both wholesale and retail, and that in altering prices to meet the taxation the trade would have to justify the adjustments, if cajled on to do so. “ The trade, in both wholesale and retail branches, had no alternative but to act similarly to the petrol companies and transfer the new impost to its customers. Once again, it merely acted as a collecting agent for the Government, as it has so frequently done in the past. The_ trade, in neither of its branches, was in a position to carry or absorb the new excise duty. Substantially rising overheads during recent years had taken care of that. “ For example, wages have doubled since 1914, and the taxation on beer itself is now considerably in excess of the total wholesale price of this commodity in 1914. Clearly there is no more justification to ask the industry to return to the trading conditions of 1914 than there would be for the trade to seek a reversion to the wages and conditions of the same year. “ It has been suggested that the imperial pint at fid be reverted to. In view of current charges this would involve the retailing of the product at virtually cost price. It is not without interest to mention that the retail price of draught beer an imperial pint m New South Wales is 9d in ;public bars and lOd in private bars. The Excise duty in New South Wales is the same as in New Zealand.

“ To attempt now, by leaving the new impost with the traders, to add to. the staggering taxation burdens shouldered bv this industry under the - headings of Excise duty, company tax, social security tax, income tax, land tax, sales tax, and local rating, would facilitate the application of the law of diminishing returns and therebv defeat the very object of the new taxation—namely, an increased yield to the Consolidated Fund for national purposes.

Bearing in mind this vital factor, the Government obviously did not expect the trade to do other than redistribute the duty. Consumers of beer, representing a widespread section of the people, were expected to find an additional £300,000 which the Budget estimated the new impost would produce. The trade was selected as the medium for the collection of that amount. Circumstances beyond the control of the industry thus made the adjustment in price unavoidable. This is of no advantage to the producer or the retailer, because experience the world over has established the unsatisfactory relationship of turnover to price increase in any commodity in general use. Invariably consumption is reduced, and the net returns suffer as a consequence. Whereas stability means security, variation spells uncertainty and prospective loss. “ The trade regrets the necessity for price adjustments, and hopes that this statement will remove the misconceptions which apparently have risen, and assist generally toward a clearer appreciation of ' the position in its correct perspective.”