SALES TAX

Manawatu Standard, Volume LV, Issue 65, 13 February 1935, Page 6

SALES TAX

> SUGGESTION FOR ABOLITION. RESOLUTION BY CHAMBER OF COMALERCE. Favouring the abolition of the sales tax, a resolution proposed by Mr H. B. Free and seconded by Air M. N. AVallaee was, yesterday afternoon, passed by the council of the Palmerston North Chamber of Commerce. The matter was raised in a letter received from the Associated Chambers. Consideration had recently been given by the executive of the Associated Chambers to the sales tax, stated the letter, and there had been some discussion as to whether the Associated Chambers should now press for the abolition of the tax. “Chambers will be aware, it was added, “that in response to a request the executive submitted to the annual conference in 1933 a remit urging the abolition of the tax, but this was rejected, mainly on the ground that the introduction of the tax was unavoidable at the time to secure additional revenue. This decision precludes the executive from taking any further action unless authority is given by the constituent chambers after a review of their own decision of more than twelve months ago. “The reasons actuating the executive in reopening the subject are that there is now a distinct improvement in the revenues of the country and the prospects, as stated by the Minister of Finance, are that there will be a Budget surplus at the end of the year. This, of course, is without reference to the ultimate cost of exchange, which is at present the subject of a suspense account. The executive considers that the taxpayers are entitled to the benefit of any improvement in revenues by tax remissions. “Wlicn the sales tax was introduced the official estimate of its yield was £1,600,000 in a full twelve months. The actual yield for the financial year 1933-34 was £1,847,000. Official figures now show that merely for the six months ended September 30, 1934, the yield from sales tax was £1,020,000, as compared with £863,000 for the corresponding period of 1933. Ihe executive advances the following additional reasons for the abolition of the tax: — “(1) The tax was introduced as an emergency measure at a time of instabiiitv in the national revenues, but it now" bids fair to be a permanent tax unless an effort is made to - have it abolished. “(2) It is a misnomer that the tax is 5 per cent.; experience of it shows that it ranges from 13 to 15 per cent. “(3) The abolition of the tax would alone be satisfactory; any reduction in the nominal rate of the tax would not reduce the cost of collection which results to business bouses through having to act as collecting agents for the Government. “Another question on which the executive desires to have the views of chambers is the question of a tax, or taxes, alternative to the sales tax, if an alternative is considered to be necessary.” The question of any suggested alternative being required was referred by the Chamber to its legislative committee .