SALES TAX INCIDENCE

Northern Advocate, 29 December 1934, Page 8

SALES TAX INCIDENCE

■ The information was published yesterday that the sales tax collected in the Dominion during November constituted a record since the inception ot the levy. The (Government would be well advised not to ignore the protest by the Dunedin Chamber of Commerce against the sales tax (says the Christchurch “Press’'), for it is probable that Avhat was said about this form of taxation at the meeting in Dunedin represents the opinion of the Avhole commercial community. It can reasonably be argued that the Government was wise to impose the sales tax when it did and wise not to" remove it this year. The great advanatage of the sales tax, and it Avould be difficult to name another advantage, is that the yield is immediate, substantial, and certain. When the Government resorted to it there was a budget deficit in prospect Avhich constituted a serious threat to the country’s financial stability, and although the position has greatly improved since then the Government Avas Aviso, in vicav of the depletion of its reserve funds, not to abandon any important source of revenue in its last budget. Nevertheless, the commercial community is justitled in seeking from the Government an admission that the sales tax is in itself an undesirable form of taxation, and that in the last feAv years Avholesale and retail traders have borne a very heavy share of the burden of national taxation. The general argument against the sales tax is the argument against all forms of indirect taxation and need not be traA'crsed here. The particular arguments against it are that it is expensive to collect, that it involves traders in a great amount of extra clerical Avork, that it is a drag on internal trade, and that it tends to raise the cost of living. Moreover, it can hardly be doubted that an increase in the volume of internal trade would folloAv the removal or substantial reduction of the sales tax and that this in turn Avould stimulate employment. The Minister for Finance. has already hinted cautiously that the present form of taxation, owing to the many additional imposts since the depression began, is neither economical nor fair in its incidence and should be revised. The Minister might justifiably be a little more explicit.