TAX ON SALES

Rotorua Morning Post, Volume 1, Issue 199, 15 April 1932, Page 6

TAX ON SALES

("Post" Svecial Commissioner)

NEW LEGISLATiON FOODSTUFFS AND FARMERS REQUIREMENTS PROBABLY EXEMPT N.S.W. SYSTEM COPIED

WELLINGTON, Thursday. Ht is now praetically certain that the saies tax legislation which the Government proposes to introduce — perhaps to-morrow — will follow fairly closely the lines of the New South Wales system. the charge being imposed at the source between the wholesaler and the retailer. The amount of the tax has not yet been determined, but it is likely to be 2S per cent. and it will not be surprising if a considerable range of items, including foodstuffs, is exempted. The tax will be the subject of separate legislation and will not be in- , cluded in the Finance Bill. The reason is that it involves the authorisation of special eollecting machinery of a type not previously required in New Zealand and the inclusion of the widest powers to discriminate between items which could fairly carry a heavier impost and those which represent everyday necessaries. Two aspects which the Government will have in mind are the cost of liv- j ing and an endeavour to partially m'ake up the serious decreases in Customs revenue_ from the turnover of New Zealand manufactures. Elastibty will be the keynote of the legislation. Cost of Living It is gathered from inquiries in official circles that the utmost care will be taken in the legislation to see that the cost of living is not increased as far as necessaries are concerned. In addition to foodstuffs in common use, agricultural requifements are likely to be included in the list of exemptions. One authority, discussing the projected legislation, remarked that with such B:lls the seh'edule of exemptions invariably outweigh considerably the list of items subject to tax. As a matter of guidance in framing its legislation, the Government does not laclc precedents in the imposition of a . saies tax, although the exp'erience in those countries where it has been tried may not have applied a suitable test to enable the effect of such legislation in New Zealand to he gauged. In 1918 Germany imposed a turnover .tax which yielded up to 36 per cent. of the total revenue. In 1920 Canada, France and Czechoslavakia followed her example and in the following year the same form of taxation was accepted in Belgium, Italy, Hungary, Rumania and Russia, Austria and Poland followed suit in 1923 an,d Turkey in 1925. In the main, these were turnover taxes, applicable to all transactions. History of System The earliest use of the saies tax in the British Empire was Canada's experiment and New South Wales adopted legislation on the lines of that of Canada as part of its revenueseeking crusade in 1930. Canada first imposed a multiple tax amounting to 6 per cent., but this was subsequently reduced more than once until finally it rested at one per cent. The Australian charge is a tax of 2 h per cent. on the sale value of (1) goods manufactured in Australia and sold by the manufacturer or dealt with by him otherwise than by sale; (2) goods manufactured in Austraka and sold by a purchaser from the manufacturer; (3) goods manufactured ;n Australia and sold by a person who is not a manufacturer or a purchaser from the manufacturer; (4) certain goods manufactured in Australia and dealt with by the producer otherwise than by sale; (5) imported goods; (6) goods imported and sold by the importer; and (7) goods imported and sold by persons other th'an importers, etc. In enaeting the legislation, no less than n'ne Bills were introduced. Exemptions are provided for and the tax operatjs as from a speeified date. The adoption of a saies tax which "might yield a further £1,000,000" was recommended by the Economic Committee in an additional section cf its report which was tabled by the Minister of F'nance (the Hon. W. Downie Strwart) after reading his financial statement in the House of Representatives last week.