SALES TAX RELIEF

Otago Daily Times, Issue 26232, 16 August 1946, Page 6

SALES TAX RELIEF

For months past it has been freely hinted from Wellington that the Budget would provide some relaxation of the crippling burden of sales taxation which has been such a blight on business enterprise in the Dominion. Mr Nash has, it is true, allowed some relief, but it is likely that he will find his concession satisfying neither to business interests nor to those members of his own party who still desire the complete abolition of this tax. When it was found necessary to raise additional funds for war purposes the sales tax on many items was promptly loaded by an additional 10 per cent. Just how profitable this step was to the Government can be seen by the figures in the yearly returns. For the year ended March 31, 1945, the sum of £ 13,600,000 was collected in sales tax, while in the last financial year the amount was £15,000,000. The War Expenses Account received approximately 70 per cent, of these receipts and the Consolidated Fund the balance. With the exception of wages, there was probably no single item in the cost structure of industry that exceeded the amount of this tax which, of course, the consumers were called upon to pay.

Having permitted the war loading to continue for a year after the conclusion of hostilities, Mr Nash now propounds a complicated theory of reductions which, while welcome to the general public and the businesses to which they apply, does nothing to assist the many traders whose selling lines must still bear the war impost. The reductions will apply to building materials of all descriptions, clothing, household furnishings, and a number of miscellaneous items. The relief thus afforded to the taxpayer is estimated at £7,000,000 for a full financial year, or £3,800,000 for the remainder of the present year. All the articles in the schedule are urgently required, and in so far as the concessions will assist to reduce building and housing costs they ,will be received with relief. Even more acceptable to the community would have been a promise from Mr Nash of a relaxation of the iniquitous system of import control. His concessions would be more sincere if he were to .make it possible to import in the required quantities the urgently needed materials that are

necessary to house and clothe the people. The Government, Mr Nash stated, was pai-ticularly anxious to assist industry towards expansion and-rehabilitation, and in order to provide a new stimulus to industry the excess profits tax is to be abolished. Quite apart from the fact that this tax was imposed exclusively for war purposes and its retention was unjustifiable, the relief thus afforded industry amounts to no more than £500,000 a year. This tax was, in fact, one of the least productive of all the Government’s war-time imposts, and its continuance in peace-time was hindering the recovery of industry, which remains hampered by a multiplicity of costly controls.