THE SALES TAX

Evening Post, Volume CXV, Issue 35, 11 February 1933, Page 12

THE SALES TAX

BILL INTRODUCED

A LENGTHY MEASURE

PROVISIONS OUTLINED

It has taken 69 clauses of the most complicated character to provide the legislative machinery for imposing and collecting the 5 per cent, sales tax adopted hy Customs resolution by the House of Representatives on Wednesday night. So voluminous are the clauses that the Statute will fill 35 pages. The Bill, which was read a first time after a brief debate, prescribes the method of collection, the duties of manufacturers and manufacturing • retailers, and • the heavy penalties to be inflicted for non-compliance with the provisions of the measure. The discussion in the House centred round the question of exemptions, but it was clearly indicated by the Minister that the schedule was not likely to be added to, as every possible angle had already been considered by die Government. Explaining the substantial nature of the penalties set out in the Bill, the Minister announced that administration in this respect would be along the lines of that of the Customs Act.

The Act is to be administered by the Customs Department, and the Minister of Customs is empowered to fix districts for the collection of the tax.

Any person may be licensed by the Collector of Customs as a wholesaler or a manufacturing retailer. Every person who desires to be registered is to make application to the Collector and is to give such securities as may be desired byj the Collector. Applicants, if they are approved, and on the payment of a fee (if any) of &1, are to be issued with v a. licence in the prescribed form. The licence will authorise the holder to act as a wholesaler or manufacturing retailer. Every licence is to remain in force unless and until it is surrendered or revoked.

Unlicensed wholesalers and manufacturing retailers who Bell or manufacture articles are to be subject of a fine of the amount of the value of the goods or of £100, whichever ia tho greater. Every licensed person who carries on business as a wholesaler or as a manufacturing retailer at any place not. authorised under his licence is to be subject to a fine of £100 for every day on which he carries on his business.

If, in the opinion of the Minister, iif is in any case impracticable or unnecessary that a person who carried on business as a wholesaler or as a manufaetring retailer should bo licensed as such, either because the quality of goods sold or manufactured or the manufacturing processes involved are of relatively small value, or because the seller retains an interest in the goods, or because he has a beneficial or financial interest in the business of the purchaser, or because the purchaser has a beneficial, or financial interest in.the business of the seller, or because the seller'is both a wholesaler or a retailer, or because the goods sold or manufactured are not taxable good 3, or because of any unusual o^ peculiar relations which exist between the seller and the purchaser, or because of any other special circumstances or conditions, the Minister may in his discretion and under such conditions as to the payment of sales tax or otherwise as he t&inks fit direct whether such wholesaler or manufacturing retailer need be licensed. IMPOSITION OF TAX. The Bill makes provision for the imposition of a 5, per .cent, sales tax on the following goods:— (a) Sold by a wholesaler after Bth February, 1933, to any person other than a licensed wholesaler. (b) Manufactured by a manufacturing retailer after Bth February, 1933, for sale otherwise than to a licensed wholesaler. (c) Imported into New Zealand after Bth February, 1933, and entered for home consumption under the Customs Act, 1913, by any person other than a licensed wholesaler, if such goods are intended for sale or are intended for use by a manufacturer Tetailer in the maufacture of goods for,sale. In the case of any disputes the decision of the Minister of Customs is to be final. Provision is made for exemptions of goods as outlined in the Customs resolutions adopted by the House on Wednesday night. SALE VALUE OF GOODS. Tho sale value of goods is to be determined in accordance with tho following provisions:— (a) In the case of goods sold by a wholesaler to a Tetailer the salo value shall be the price for which the goods are actually sold, and in the case of any other goods sold by a wholesaler, shall be the fair market value of such goods as if they were sold by a wholesaler to a retailer in tho ordinary course of business; (b) Iv tho case of goods manufactured by a manufacturing Tetailer the sale value ■ shall be the fair market value of such goods as if they were sold by a manufacturing retailer to a retailer in the ordinary course of business;

(c) In the case of goods imported into New Zealand and entered for home consumption, the sale value shall be as follows: —

(1) The equivalent in New Zealand currency of the value of those goods for Customs duty; (2) tho amount of Customs duty (if any) payable on those goods,- (3) twenty per centum of the sum of the amounts referred to in paragraphs one and two. In the event of any dispute arising, the Minister of Customs is to decide the matter and his decision is to be final.

. Wholesalers and retailers are to provido within twenty-eight days a return showing the sale value of all taxable goods sold by them during the month and on the delivery of the statement the sales tax becomes due. Every ■wholesaler or manufacturing retailer who fails to make a return is liable to a fine of £100 or of the amount of the sale value of the goods which should have been returned.

The Collector of Customs is empowered to assess the taxation due on the return, or' in the event of his suspecting that the amount returned is less than it should have been to assess the taxation on the amount which he considers should have been returned.

Eight of appeal to the Minister against the assessment is given in the Bill, and the burden of proving that the assessment is incorre^ ia placed upon the appellant.

The sales tax is to be regarded as a debt to the Crown. For prompt payment of the tax it is proposed that there should be a discount of 5 per cent., but if the tax remains unpaid two months after the due date the Crown is empowered to imposo a penalty of 10 per cent., additional.

The liability of agents, liquidators, and deceased taxpayers upder the operations of the legislation is defined. A principal will be liab'l© for the acts

of his agents in relation to the sale, manufacture, and importation of goods, and similarly an agent acting for another person will be liable for the tax, fines, or penalties. An agent for a principal absent from New Zealand who is required to wind up the latter's business must first notify the Comptroller of Customs and set aside out of the assets a sum which in the Comptroller's opinion will be sufficient to provide for sales tax. Failure to give this notification or provide for the payment of the tax will render offenders liable to a fine of £100.

Liquidators of wholesale or retail manufacturing companies which are to be wound up in accordance -with resolution must notify the Comptroller within fourteen days of the passing of tllG resolution, and before disposing of the assets must set aside a sum for the payment of sales tax which then is or may thereafter become payable. Failure to comply with this requirement will make the liquidator personally liable for the amount of the sales tax. If at the time of his death a taxpayer has not paid the whole of the sales tax due the Collector will have the same powers and remedies for assessment and recovery from executors or administrators aa had the payer been alive. The amount of sales tax owing will constitute a charge on the estate until paid. Where no administration has been granted within six months of death,the Collector may arbitrarily assess the amount of the tax. This assessment is to be advertised, and objections may be lodged within forty-two days. Subject to,any amendment of the assessment by tho Minister or by a Court, the amount fixed by the Collector will be conclusive evidence of the indebtedness. Power is given the Collector to issue a distress warrant for collection of the tax assessed. If at any time administration of the estate is granted the person affected may within twelve days after the date of the grant lodge objection to the assessment. PAYMENTS IN ERROR. The Bill sets out the procedings which mayi be taken for the recovery of sales tax paid_ in error. At any time within one year after the payment of the tax proceedings for a refund may be taken against the Crown on the ground that the impost was not lawfully chargeable or was charged in excess. This section does not apply to any ground on which the determination of the Minister is made final by the Act. In addition, if the Comptroller is satisfied that tax has been paid in error, whether of fact or of law, he may refund it upon application being made within three years of ' payment. All moneys refunded in error will be. recoverable at law, within three years after payment, or without limit if the refund has been obtained by fraud. Subject to regulations drawbacks of tax paid on goods exported from New Zealand may be allowed under the same conditions and restrictions as are applicable to drawbacks of duty under tho Customs Act, 1913. POWERS OP COLLECTORS. Wide powers are given officers of the Customs Department under the legislation. . / The Collectors are empowered to impound and retain any documents presented with the returns required under the Act and the holder may receive in return a certified copy. Questions may be asked as to the particulars given in returns and proof by declaration or the production of documents of the correctness of the return may be required. Refusal to comply with these requirements will make offenders liable to a fine of £50, or to a fine of the amount of tho sale value of the goods concerned; whichever is the greater. In addition the Comptroller or the Collectors may order in writing the production for inspection of all or any receipts, records, or other documents, may make copies of them, and may require the personal appearance of the business man concerned for tho purposes of cross-examination.. Non-con-formity with this requirement will cost offenders £50.

Provision is made for the issue of sales tax warrants under which officers may enter by day or by night, and whether peaceably or by force if need be, any building, house, premises, or place in which he has reasonable cause to1 suspect there are goods on which sales tax has become duo and remains unpaid, any1 goods in respect of which an offence has been committed, or any books or documents . containing information that might lead to the recovery of moneys under the Act. The warrant contains also the power to search by force and to seize and confiscate goods. The warrant must be shown on demand. A fine of £200 is prescribed as the penalty for those who obstruct the officer in the exercise of any right of search, or any other right under the section or under the warrant.

Another section of the Bill deals with the right of Collectors to take securities for payment of the tax and for compliance with, the provisions of the legislation.

The security demanded-May be by bond, with or without sureties, guarantee, or cash deposit. It may relate either to a particular transaction or I to a class of transactions, and under such conditions as to. forfeiture, penalty, or otherwise as the Minister directs. | Regulations will be issued prescribing the forms of bonds, guarantees, and other securities. If the Collector is dis. j satisfied with the sufficiency of any j security he may require a new security in place of it. In default of the new security being given the Collector may suspend—as with the case of those who refuse to give the initial security—any licence or refuse to issue one. THE PENALTIES. Substantial penalties are prescribed for offences under the Act. A fine of £100, or'one of three times the value of the goods concerned, whichever amount is the greater, will be the liability of those who commit any offence against the Act, or.do any act, with intent, in either case, to defraud the revenue by evading or enabling any other person to evade payment ofthe tax; obtain or enable any other person to obtain any money by way or drawback or refund; in any other manner whatsoever in relation to any goods;' or who conspire, to defraud the revenue in relation to any goods. , Other offences and penalties are set out as under:—

Making a return or statement which is erroneous or defective in any particular, £100.

Obtaining any drawback, refund, or remission by means of erroneous or defective .written statements or documents which are not genuine or which are in any respect erroneous or defective, £100.

Making a declaration which is erroneous in any particular, £100. Knowingly making any false declaration will constitute an indictable offence punishable by a term of imprisonment up to two years. Production or delivery to" an officer of any document which is not genuine. £100. ' '

A fine of £10 is the penalty for goneral offences for which no other penalty is provided. '

Failure to answer questions truly, £50. " When companies are convicted of offences, every director and every officer concerned; in the management will be held to be guilty unless he proves that the act took place without his knowledge or consent.

An offender will not bo punished twice for the same offence.

If, an offence ig committed without intent to defraud the revenuo, the offender may be convicted of that offence, and shall not be acquitted merely because the intent is not proved.

A person who. is-twice convicted on

summary offences within two years, may on the second occasion at the discretion of the Magistrate, be sent to gaol for three months in lieu of being fined.

In other cases the minimum fine in every case is to be £25 or one-fourth of the maximum fine that can be imposed, whichever is the less.

Power is given officers under the Act to arrest without warrant within seven days persons suspected of having committed offences, with intent to defraud the Tevenue, but Bummary proceedings aro not to be taken unless on the information of a collector.

In tho event of actions being taken to the Court in reference to the payment of tho sales tax, the trarden is placed on the taxpayer for proving his innocence. Statements made on behalf of the Crown are to be accepted unless the contrary is proved.

The Governor-General is empowered to revoke any fines imposed under theAct.