SALES TAX

Manawatu Standard, Volume LV, Issue 89, 13 March 1935, Page 5

SALES TAX

ULTIMATE ABOLITION. URGED BY CHAMBER. Affirmation of the principle of the ultimate abolition of the sales tax by progressive reductions was expressed at a meeting of the council of the Palmerston North Chamber of Commerce, yesterday afternoon, following a similar expression of view by the Associated Chambers. The legislation committee of the chamber, appointed to investigate the matter, reported as follows: “The committee has considered the question of an alternative to the sales tax, but is unable to make any recommendation in this direction. The committee, however, affirms the principle of ultimately abolishing the sales tax, and as the Dominion’s finances are improving and, also, as the sales tax is producing a far greater sum than at first anticipated, it is suggested that this chamber should recommend that this tax bo reduced progressively, with the | general improvement of the country’s I finances.”

Mr M. H. Oram, chairman of the committee, .stated that the tax had been brought in as an emergency measure for a specific purpose, and until that disappeared entirely it wins considered that there should be a gradual diminution of flic tax as the country s finances improved, for there was always the danger of a tax so easily collected becoming permanent. There were, however, some anomalies in the incidence of the tax, and he suggested that those should be referred to the' trade and industries committee for investigation. , , ~ , Mr Alexander Clark_ stated that there were many anomalies under the sales tax. Any person in the manufacturing line whose turnover did not exceed £SOO per annum was not required to register as a maniuactiiring retailer. It was possible that lie might import commodities either direct, or through a licensed wholesaler, in both cases paying sales tax on the requirements. However, when converting these commodities into finished products he had an advantage over the licensed manufacturing retailer, in as much as lie did not have to charge sales tax to his customers, did not have to furnish a monthly return to the sales tax collector, or pay any furthei tax whatsoever on the finished articles. The business men who were hit the hardest were those who not only had to pay sales tax on all raw materials

imported, but had to pay a further tax on the difference between the price of the finished product and that ot the raw material. This additional tax clearly demonstrated that it v.as a direct imposed tax upon labour involved in manufacturing the finished article*; This extra tax was not recoverable, as j a licensed manufacturing retailer was j in competition with those who were not required to register, and consequently j to secure business could not obtain a, higher price than his competitor. The | tax had a cumulative effect, as for instance, on British imports, duty free, | but with 3 par cent, primage, the sales tax was 8.36 per cent.; on dutiable British goods with 15 per cent, duty it was 9.14 per cent.; on dutiable British goods with 25 per cent, duty it was 9.8 per cent.; and on foreign goods with 40 per cent, duty it was 11.36 per cent. The report was adopted, and' on the motion of Mr Clark it was decided to refer the matter of the anomalies to the trade and commerce committee.

NO AMENDMENT THIS SESSION. J Per Press Association. WELLINGTON, March 12. | In the House of Representatives this, afternoon. Mr F. Jones asked the Min-| is ter of Finance whether he would in-; troduce amending legisbition this ses-! sion to remove anomalies that had ; arisen in connection with the adininis-! tration of the sales tax. He said his question was prompted by the position

that had arisen in the tailoring trad© in Dunedin. Rt. Hon. J. G. Contes replied that it was not proposed to amend the sales tax during the present session. It was considered that the existing law was adequate to deal with any problems that might arise. The position of the bespoke tailoring trade was receiving careful consideration, and it was hoped that the matter would he satisfactorily completed at an early date.