LEVYING HIGHER SALES TAX

Southland Times, Issue 24164, 28 June 1940, Page 4

LEVYING HIGHER SALES TAX

CHARGE OPERATIVE IMMEDIATELY ADDITIONAL REVENUE FOR WAR (From Our Parliamentary Reporter) WELLINGTON, June 27. Goods subject to sales tax which are imported into New Zealand after midnight tonight will be liable to the new rate of 10 per cent. _ The necessary resolution making this operative was passed by the House of Representatives this evening. In reply to a question by the Leader of the Opposition (the Hon. Adam Hamilton), the Minister of Finance (the Hon. W. Nash) explained that the new tax was to provide additional revenue for carrying on the war effort. It was expected that additional revenue of £2,000,000 would be received for the balance of the present financial year. All exemptions remained as before. These covered all essentia) foodstuffs, drugs, industrial machinery and the major proportion of the requirements of primary industries. “There is one minor alteration. The increase has one advantage in that there is no cost of collection,” said the Minister, who added amid Opposition laughter, that it was just as easy to collect £2 as £l.

“Mr Nash explained that the discount on sales tax of five per cent, allowable if the tax was paid by the twentyeighth of the month would be reduced to 2| per cent.

IMPORTS TO MIDNIGHT “All goods imported into New Zealand by midnight tonight will be subject to five per cent.,” he said. “This applies to those goods in steamers alongside but not taken off.” In justification of his action, the Minister pointed to the fact that the United Kingdom was contemplating a purchase tax though he had not yet seen that it was in operation, while in Australia the sales tax had been lifted from 4 per cent, to 8 2-3 per cent. Canada had had a sales tax of 6 per cent, for some time and in certain circumstances the tax on motor-cars might run to 60 per cent. Mr J. A. Lee (Dem. Lab., GreyLynn), said that he could not laugh about the increase in the sales tax. Sacrifice alone would not win the war. He could not help feeling that taxation was going to get well after the family man in his home. “We are getting at the humblest from both ends,” he said. If sacrifice would help to win the war it was all right, but to make the woman pay more for her children’s shoes and clothes would not help. “The Minister of Finance is the world’s champion when it comes to securing revenue in the orthodox form,” he declared. NEED OF FOODSTUFFS Prices were on the way up on goods that could be produced in New Zealand. A nation had to march on its stomach like an army but he had ah idea that by the time the increased taxation was passed on there would be a reduction in the consumption of foodstuffs produced in abundance in New Zealand. The Rt. Hon. J. G. Coates (Nat., Kaipara) asked the Minister to consider before the Bill was introduced the question of placing the sales tax on the article when it was actually retailed instead of the sales tax being charged at the source. The point was an important one because when the retailer received his goods the 10 per cent, sales tax had been'added and he then added his cost.

In his reply the Minister said he wanted to emphasize that the discount would be 24 per cent, only on every tax that was paid at the rate of 10 per cent. Foodstuffs, he continued, were not subject to the tax. He did not think there was a single foodstuff produced in this Dominion subject to the tax. The second pqint he would like to make clear was that there was nothing that could be made in the Dominion that the Government would not arrange to have made. All the finance necessary to get it made would be available where required. The country did not live on money, it lived on goods and to the extent that the production of goods was expanded in this Dominion, less the quantity sent to the people of the United Kingdom, goods would be available.

“PAY AS WE GO”

“The other thing that I would emphasize is that we must pay for the war as we go on,” Mr Nash continued. There was nothing to carry the war on other than the goods and services that were produced before or during the war. Mr Lee: There are ways of paying for them. “That still doesn’t alter the fact,” Mr Nash replied, “that we can only carry on this war by using the goods that are produced before or during the war. i You can pay for it later but it is only ! postponing the evil day.” He added that he would look into the point raised by Mr Coates but in his opinion the wisest place to levy the tax was at the source. The resolution was passed and the House adjourned until 7.30 p.m. on Tuesday. WAR EXPENDITURE £37,500,000 New Zealand’s war expenditure of £37,500,000 for the current financial year will be made up as follows: — Army— New Zealand Expeditionary Force— £ Overseas 18,000,000 In New Zealand 7,000,000 Home Defence 5,000,000 Navy 1,500,000 Air Force— Overseas 1,750,000 In New Zealand 4,250,000 £37,500,000 These figures were announced by the Minister of Finance in presenting the Budget last night. Arrangements had been made for the cost of New Zealand’s forces overseas to. be financed by the United Kingdom Government on a loan basis. To the extent that this arrangement was utilized the Dominion would be piling up dead-weight overseas debt that would be a heavy burden for many years to come when the ability to pay might be less than it was now. There was, therefore, every incentive to strain every nerve to meet from New Zealand the costs of maintaining the forces overseas as such costs accrued. It was preferable to borrow money within the country rather than to pile up overseas loans. Imports must be reduced to permit the payment of as much of the costs as possible from the value of exports. Including £1,750,000 on account of the Empire training scheme, the total overseas costs of the forces had been tentatively estimated at £19,750,000, and expenditure in New Zealand at £17,750,000. On the basis of present taxation it was estimated that there would be a net decrease of £2,100,000 in the revenue of the Consolidated Fund, the principal decreases compared with last year’s receipts being Customs duties» £2,400,000.