PROBLEMS OF TAX

New Zealand Herald, Volume LXX, Issue 21423, 22 February 1933, Page 11

PROBLEMS OF TAX

MANY RULINGS WANTED DEFINITIONS OF TRADERS COMPUTATION OF PAYMENTS ' IMPORTATIONS BY USERS ! As in the case of Australia and Canada, anomalies and problems continue to be encountered in the provisions governing the opieration of the sales tax recently introduced in New Zealand. A number of points which arose following the announcement of the tax have since been cleared up, and the experience has been that i representations along these lines have been ! received in a fair manner. Nevertheless, rulings are awaited on a number of problems of outstanding importance. In the first case it is felt that some more exact definition is required of a wholesaler and a retailer. Normally a retailer is one who sells to a user, and stocks held by retailers at the time of the resolutions imposing the tax are free from the impost. There are, however, wholesalers who import and sell direct to the usel 1 , as in the case of bulk sales made to local bodies, who are users. The question arises whether these wholesalers are really retailers. If they are!, then their present stocks would be exempt from the tax, but under the resolutions the present stocks of a wholesaler are! taxable at the time they are sold to, other than another wholesaler. Imports by Retailers When the resolutions were passed, the tax upon goods imported by a retailer was based upon their value for customs duty, plus the duty, plus 20 per cent of the total. Wholesalers felt that this placed importing retailers in an advantageous position, since the value for customs duty took no account of exchange!. Wholesalers, on the other hand, when assessing the fair market value of their goods for sales tax purposes, were obliged to include exchange in the! basis of computation. Then the Sales Tax Bill was introduced and it was found that the clause regarding tax on imports by retailers had been amplified by the words "the equivalent in New Zealand currency of the value of those goods for customs duty." From this it was felt to be clear that whole salers, who include manufacturers who are not manufacturing retailers, were to be placed on the same footing as importing retailers. The question has been raised, however, as to what is New Zealand currency. It is hold in some quarters that New Zealand currency is pounds, shillings and pence' —the same as British currency —and not, as eeems intended by the bill, equal to a given amount of British currency plus 25 per cent. The exchange rate of 25 per cent, it is contended, is melely the cost to New Zealand of purchasing British currency, and that this leaves the position as it was according to the resolution. Another important matter on which a ruling is awaited is the position of imr portations by a user. The bill makes no ■mention of goods in this category. When the resplutions were introduced the Minister said it was not proposed to make the tax payable on gpods imported by private persons for their own use and not for resale. It was considered the cost of collection and the harassment caused- to persons receiving small parcels from abroad would more than outweigh any revenue that might bo obtained. Local Bodies' Purchases Although the Minister used the words "private persons," the same condition would seem to apply in every case where importations are made for consumption and not for sale, f6r liability for tax, according to the bill, occurs only in the case of goods sold or intended for sale. If this is so, local bodies and firms which are users of goods will be able to import their own supplies and thus avoid paying sales tax. Local business will therefore suffer. It has been suggested that an alternative to the present provisions •of the bill would be to levy the sales tax on all goods except exempted foodstuffs, whether for sale or for usd by the importer, and that it bo collected at the time of the goods entering New Zealand. An exception to the latter provision is suggested in the case of imports by manufacturers, who would pay on the wholesale value of the goods manufactured by them. This, it is contended, would place all traders on an equal footing and make classification of business as either wholesale or retail unnecessary. PROGRESS OF BILL MOST CLAUSES PASSED TAKING AMENDMENTS TO-DAY [BY TELEGRAPH —FRESS ASSOCIATION] WELLINGTON, Tuesday Discussion of the Sales Tax Bill in Committee was resumed by the House of Representatives this afternoon and was continued in the evening. Progress was more rapid in the evening, and, although Labour members called for a division on the majority of clauses, some were passed on the voices. The section of the bill relating to evidence in connection with the procedure under the legislation had been completed by 9.50, and substantial progress made with the last section. A few clauses were held over pending the introduction at a later stage of amendments to them. Progress was reported at 10.20, when 1 everything except the clauses which were held over and the schedules had been passed. The Primo Minister, Mr. Forbes, stated that the supplementary Order Paper containing the amendments was not yet ready. The first business to be taker, to-morrow would be the consideration of these amendments, after . which the House would proceed to deal with the schedules. SUGGESTED ALTERNATIVE SUGAR AND TEA WHAT TAX WOULD REALISE In a letter to the Wellington Post roundly condemning the sales tax, a correspondent writes:—''All this tTOuble could be averted if the Government had taken its courage in both hands and had decided to place a duty of 2d per pound on sugar and 3d per pound on tea produced in the British Empire. Ibose duties would not cost a penny piece to collect, and they would not, be felt appreciably by the community as a whole. With a family of five, I estimate they would be called upon to contribute approximately Is 3d per week. That, I am sure, would be much less than that family would have to find in the shape of sales tax. Based on last year's figures, it is estimated that these duties would yield round about £1,650,000 per annum. Just about equal to the sum it is expected to raise by means of a sales tax. "I know that temporarily there would be a certain amount of indignation shown at the Government proposing to interfere with the free ( ?) breakfast table, but. a sales tax would not only interfere with the breakfast tijble, but with the dinner and tea table."