TAXATION ON SALES

Taranaki Daily News, 14 February 1933, Page 12

TAXATION ON SALES

CALCULATING THE LEVY. CASE OF IMPORTED GOODS. Although the sales tax has been fixed at 5 per cent., the levy will be actually a much higher ratio of the original cost in the case of imported goods, varying from 6.47 per cent, in the case of duty free wares up to as high as 10.12 per cent, in the case of articles which are subject to a duty 'of 50 per cent. Discussing the new tax on Saturday, Mr. Hugh Thomson, chairman of the Auckland Importers’ Association, advanced this contention and the formula on which the calculations were made. He said that to arrive at the taxable amount ori which the sales tax was levied, primage, duty, the 20 per cent presumed profit and the 5 per cent, rebate for prompt payment of the sales tax had to be taken into account. Thus, to goods of which the invoice value was £lOO had to be added the customary 10 per cent ad valorem, making £llO on which there’ would be 3 per cent, primage, £3 6s, plus on that total the 20 per cent, presumed profit equalling £22 13s 2d, and bringing the basis for sales tax purposes up to £135 19s 2d. On this, the tax at 5 per cent, was £6 15s lid, and the rebate of 5 per cent, for prompt payment, 6s 9d, leaving the net tax £6 9s 2d, or 6.46 per cent. Mr. Thomson said it had been calculated that on foreign goods subject to 15 per cent, duty, plus stirtax, the sales tax would equal 7.43 per cent.; 20 per cent, duty, 7.53; 25 per cent, duty ,7.84; 274 per cent, duty, '8; 35 per cent, duty, 8.47; 37J per cent, duty, 8.64; 45 per cent, duty, 9.75; and 50 per cent., 10.12 per' cent. “The tax is much in the form anticipated by merchants, and it seems impossible to escape the anomalies that occur wherever it is introduced,” Mr. Thomson said. "It seems imperative to -submit to some increased taxation to provide for the liabilities incurred by the Government as the result of inflated exchange. Income tax, by reason of the depleted. profits of the business community, has ceased to be a reliable and remunerative source. “In Australia, when the sales, tax was introduced, many knotty points arose and some absurd conditions followed as a result of interpretations. No doubt the Government will have the advantage of this experience in deciding on these as they occur in this Dominion, as they undoubtedly will. It might be advisable to set up a queries « apartment similar to that created when *ae unemployment taxation was introduced. “When all is summed up, the tax actually amounts to ,an additional duty upon imported goods and an excise duty upon locally-manufactured goods. It is problematical whether an additional primage duty on all imported goods and an excise duty on locally-manufactured goods would not be as effective with less clerical work arid disturbance to trade.”