Scullin’s Sales Tax

Sun (Auckland), Volume IV, Issue 1050, 14 August 1930, Page 8

Scullin’s Sales Tax

BEWILDERMENT IN SYDNEY WERE New Zealand not confronted with heavy taxation and tariff impositions by its Prime Minister, it would have leisure to contemplate the revenue-producing measures adopted by the Australian Prime Minister, Mr. J. H. Scullin. Mr. Scullin is introducing the sales tax. an idea borrowed from Canada. The difference is that, in Canada, the sales tax is a substitute for income-tax, but, in Australia, it is operated with income-tax still demanded by a financially thirsty Government.

Not without reason, apparently, have Australians been asking themselves why they should have to pay this sales-tax in addition to incometax. So great was the mystery attached to the measure that The Sun,’ Sydney, was led to make this comment: —“Extraordinary contusion prevails in the business world today as to the effect and the incidence of the Federal sales-tax. The tax. involving a method of raising money altogether new to Australia, will be imposed retrospectively on transactions. The amazing situation was disclosed that even the Federal taxation authorities in Sydney are without official advice about the tax. “Besieged with inquiries regarding its effect, they can only reply that they do not know. A more astonishing position on the eve of the introduction of a tax estimated to yield £6,250,000 a year could scarcely be Imagined.” Under the Australian regulations for the sales-tax, all wholesale merchants and manufacturers have to register as taxpayers. The tax Is payable oniy on the last wholesale transaction. Sales of agricultural products or goods for export do not come within the scope of the new measure. The “Bulletin,” Sydney,' points out tlmt Mr. Scullin has gone to Canada for the notion of his sales-tax, but he has overlooked one very important fact. “In Canada,” the “Bulletin” remarks, “the sales-tax Is a substitute for income-tax, and, as such, it has certainly been successful. In 192728, the sales-tax yielded just on 64,000,000 dollars; the income-tax, 56,500,000 dollars. During the corresponding year, the amount dragged from Australians who paid incometax was 25,750,000 pounds, and the rates have since been heavily increased in the Commonwealth, and at least three States. And there are 9,750,000 Canadians and not 6.500,000 Australians. "The public will not submit cheerfully to tlie sales-tax unless it is accompanied. as in Canada, by a substantial reduction of income-tax. arranged In concert with the State Treasurers. "In fact, it will not submit cheerfully to any addition to its towering load of taxation until the terrific cost of Federal Government is whole-heart-edly cut down.” The “Bulletin” trenchantly criticises the huge increases in the expenses of operating the Federal departments, and says that Sir Otto Niemeyer, of

the Bank o£ England, who is in Australia to assist the Commonwealth out o£ its overwhelming financial difficul ties, will find that, in addition to the Government’s enormous internal loans, Australia has borrowed so much abroad that its imports have exceeded its exports by £40,000,000 a year oyer many years past. Continues the “Bulletin”: "He will find that behind it all, the cause o£ it all, was a huge system of political corruption, party competing with party for popular favour and dipping into the public purse and pledging the public credit to purchase it He will find that thousands of miles of railway which could not possibly pay were built under the pretence of opening up country, but. in reality, to win the few votes in the neighbourhood for the party in power, and to provide jobs for workers, with votes to give away, at higher wages than they could command anywhere else. And he will find that thousands of other men were passed Into Government jobs, maintaining and running these unnecessary works, for the same corrupt purpose.” In this way, the Commonwealth rc gards the efforts of its administrators to emerge from financial difficulties. Everywhere in Australia the need to reduce imports is being recognised. The heaviness of the burden is greatly due to the large amount of interest paid out of loans. In Canada, the sales-tax has been shown to be successful, but the Australian usage of this form of revenue production differs materially. Press opinions in Sydney are that the sales-tax introduced by Mr. Scullin bristles -with problems which may not be solved rapidly. In the beginning, the traders affected received insufficient notice of their exact obligations. An important difficulty indicated by the president of, the Associated Chamber of Manufactures of Australia, Mr. R. A. Marks, is the classification of traders. How. he asked, would provision be made for differeu tiation in registration of firms carrying along on the border-line —partly importers, partly manufacturers, partly wholesalers, partly retailers? A day before the measure was to become operative, Sydney merchants and traders were still uninformed as to the exact nature of their obligations The one clear impression they had received was that returns of sales were to be sent in to the Taxation Department once a month —and that would mean a good deal of extra organisation for everyone.