A Tax on Luxuries.

Press, Volume LIV, Issue 16252, 1 July 1918, Page 6

A Tax on Luxuries.

Tho decision of tho British Government to imposo a tax' on luxuries was evidently not come to until very shortly before tho Chancellor delivered his Budget speech, for although nearly two months have passed the details of the tax have not been fixed. In France the tax/'which, is expected to bring in 24 millions sterling—Mr Bonar Law hinted that he hopes for more than that—is levied upon (1) articles which are luxuries in themselves, (2) articles which are sold above the prices fixed by schedule, and (8) luxury trades. In Germany the Government proposed to turn the tax" into a "luxury " tax." The "turnover tax," intro-

duced two years ago, is a tax oil " transactions"—sales or the rendering of services—and it stood at the rate of one per thousand ad valorem. This rate was to be 20 per cent., or 200 per thousand, on. retail transactions in precious metals and gems, and 10 per oent. on transactions in works of art, 'antiquities, pianos, etc., firearms and I ammunition, motor-cars and motorboats above £40, carpots and tapestries I costing above £10j and skins intended for, fur clothing, there is a good deal to be said both for and against a tax on luxuries as a piece <*f practical policy. Curiously enough the objection x>n grounds of principle that is most strongly, urged comes from the Sooialists, who hold that people should be taxed oh what they receive and not on what they/ spend. The first practical objection to,; the tax relates to the initial difficulty of determining what is a luxury, arid the ensuing difficulty of seeing that the tax is duly collected. , France's experience has not, so far, been encouraging, already requests for its repeal have come from the representatives of the res-taurant-keepers, hotel-proprietors, and the clothing trade. So far as restaurants are ooncerned,.it has been found that the only way to apply the tax was to make a list of the establishments to be affected. One result is that quite oheap meals at one restaurant may; be taxed, while more expensive meals at another are untaxed. The list of articles which are considered luxuries in themselves, whatever the price, is considered defective. Silk hosiery and underwear, for example, though classed as luxuries, are often bought becauso they are actually cheaper than woollen articles./ Inoonsistehcies are complained of in the schedule of those articles which become luxuries when the price passes certain fixed amounts. For example, a woman's tailored costume is taxed if it costs over 250 francs,, and. that is a moderate price, certainly not a luxury price; but a Buit of pyjamas does not become liable to a tax tlnless it costs over 80 francs, and that is a very high price oven now. The luxury price of boots and shoes is.really less than the price <at which useful footwear of the plainest kind can be bought. These are all faults of detail, however, which can be avoided by the British authorities. There is really nothing new in the principle of a luxury tax, because in Britain certain luxuries have been taxed just because they are luxuries — alcoholic liquor, tobacco, playing-cards, motorcars, dogs, men-servants, etc. That there is room for a luxury tax we are assured by tho "Spectator," which says that many of the great drapery stores and other luxury shops have put up their prices fifty or a hundred per cent, and are yet doing four and five times the business that they were doing bofore the war. The great merit of a well-devised tax of this kind is that it would not affect anybody who did.not choose to pay it. As Adam Smith pointed out: "Taxes upon such con- " sumable goods as arc articles of " luxury are all finally paid by the con-

sumer, and generally in a manner that is very convenient for him. He " pays them by little and little, as he "has occasion to buy the goods. As "he is at liberty, too. either to buy or

' not to buy as ho pleases, it must be ' his own fault if he ever suffers any

considerable inconvenience from such " taxes." If our Government should come to realise that tho large "sur- " plus" in the consolidated fund is illusory, and a result of what may be called financial eamoutlngc, and if, as a result, they decido to revise the revenue machinery, they ought not to fail to give some consideration to the imposing a tax on luxuries here.