Inns, 

,I-\j 

5"/30 

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c,' 

EXC ISE TAXES I 

"' 

UNrrl'm STA')$S> CANADA AIm. UNI1'ED KINGDOM. 

0-1 vision o! 'l'ax Reaearoh 

.' .. 

LIBRARY 

ROOM 5030 

JUlZ1975 

rR£I,SURY DEPARTMENT 
This report describes the Federal excise taxes 

imposed in the United States and compares than with 

the excise taxes imposed by the central governments 

in the United Kingdom and Canada. It was prepared 

during 1943 in the Divisianor Tax Research for uoe 

in conneotion with legislation concerning Federal 

excise taxes. The study has been brought up to date 

as of August 15, 1944, and is now made available for 

distribution. 1'he sources used in preparing the 

study are listed in a bibliographical note on page 1.1. 

The repor-b was prepared by Mr. Jolm Copeland, 

with the assistance of Mr. Arthw.' Jaffe, under the 

supervision of Mr. Marius lrarl01etti. 

Ootober 1, 1944 

Roy Blough 

Director of 'rax Research 
I. 

II. 

EXCISE TAXES: 

UNITED STATES, CANADA AND UNITED KINGDOM 

Table of Contents 

Page 

1 

Compal'ab1e taxes - United States, United Kingdom, 

and Canada •••• oo.oo ••• a •• aoooo&ooo.oo •• ~ooo~o.oo •• n.OOOOftOOOOO 

Adlnissions .,.000 •••••••• 00" •• 0 •• 010.0'" 0 OJ 0 ••• 0., 00".000., •• .,0- •• ;.. 

1. 

2. 

General admissions O.OOOO ••• O.O.O~A.n.oo •• ooooooOOOOO.OO 

Cabarets, roof gardens, and 

sinli.lar places of cntertuirunent •• 00 • ., 00"'. ~o$ I.'. '0 o. I) I) 1).0" 

2 

4 

Do Alcoholic beverages 0.0004.000000000000000.000000.0"0.0000(1) 5 

C. 

D. 

E. 

F. 

G. 

1. Distilled spirits •• " •••• 0, •••••• lit 0 • 0 ., eo ., ., ., ., 6 (I 6 ... & ., III 0 • ! " 8 0 I) 5 

2. Fermented malt liquors e •••••••• oo •• oa.e.ooooo • .,o.o •• ooo 6 

3. \Vines., ., 110 •• 0 • 0 • ., • ill • G (I ., 0 " ., •• ., •. " " ~ • ., (II ., • " ., • ., ••• ., tI 1'1 • fI .. 0 G .0" 0 7 

a. 

b. 

still wines •••••••••• 0 •• ,l1li0 •• l1li •• .,.0 OCt 0 •• " 0.,. e" 0., 0 .0,. 

Sparkling wines .0 00 •• II • " ••• $ Il1o .. " " Q II ., • II • " 0 " • 0 " ., ,t 6 0 0 ... 

Liqueurs and cordials • "'." •• eo. 4 •• (I 0.00. fHIO III 01100 Il1o •• - .... 011 

Gasoline 

},1atches " ••• 0 •• II. II 0 •• 0 •••••• 0 ••• 0 II 0.0" 0 0 •• II Il1o G ••• 1).0 ••• It (I 0 " Il10.0 

Mechanical lighters ••• 0"lIo •••• a(l ••••• (I(looa$.0 •• 'II" •• ao" .. ooo:. 

Playing cards 0.$0" ••• 00$,,00 •• 01'10 .. 000000000.000000.000&000110 

Issuance and transfer of stock. and bonds "., •• 0". tI ..... ., 0 0 to '" (I" 

1. 

2. 

a. 

b. 

Issuance 

'fransfer 

Stock .1I •• 0 ••• O •• 0.O •• O.O •••••• II •• O.00." ••• "0.~OI)"IlI.oo ... 

a. 

b. 

Issuance 

Transfer 

i 

7 

9 

10 

11 

11 

13 

13 

13 

13 

13 

15 

16 

16 

17 
Table of Contents - 2 

I. Tobacco products ••••• III •• III. III" 0 ••• III ••• 0· •••• til ••• It....... 20 

1. Cigarett.es o ••••• oo.,o •••• o~ •• ooooo.oo.o •• o ..... f'.nooo 20 

2. Cigars •••• .,0 ••••••••• 00 •••• 00 •••••••••• 04.000.0.. 22 

3. Manufactured tobacco and snuff •••••••••• 0 ••• 1)"... 23 

III. Comparable taxes - United States and Canada •••••••••••••• 25 

>, 

A. Automotive vehicles •••••• 00., 80.00.00 III III 4. 0) efll 0000 III 0." .. 0'. 25 

C. Conununications 26 

1. Telegl'aph, cable, and radio messages •••••••• 0.... 26 

2. Telephone and radiotelephone messages .0 .. 0 ..... 0 0 27 

a. Calls other than from coinopcl'a-/jed pay stations ••• III III III. til III to 111 •• .,".0 I) III III (I. III 27 

b. Calls from coin-operated pay stations ••• 00... 27 

D. Electric, gas, and oil appliances; mechanical 

rofl'igerators j and light bulbs •••••••••• 0 •• " •• 0 •••• III 2:8 

l~. Jewelry, clocks and watches, glasm'lare 

and pottery •••• 0.00 •.••••••••••••••••••••••• 0 ••••••• '0 30 

G. Luggage, handbags, wallets, eto. 30 

H. Photographic apparatus ••••• 0 ••• III ..... G ... I). I) •• (1.40. 1).40.. 31 

I. Radio l'eoeiving sets and tubes, phonographs 

and record-playing devices •• 4o ••••• eo ••••••• eo ••• ., • ., .1(11) 31 

K. Toilet preparations •••••• oO .... OG ••••• .,. •••••••••••• oo. 33 
rI. 

v. 

r.. 

Table of Contents - 3 

Transpor·t,ation services " ••••• ., ... (10 /I /I., • ., /I ., •• ., .. .,.,., .. " .. /I 

1. 

a. 

b. 

Transportation OQO" ••• OIlG",O",.ooo."aO/lo.oo.o. 

Sea.ts and bnrths .o.o •••• oo"'o..,""~o ••• o.ooO.,o 

Page 

33 

33 

! 20$' Transporta.tion of property ., /I" •• "'.""'''. of" 0""""".. 3L" 

3. Tr: nspol'tation of oil by pipe line •••••••• "'... 34 

Comparable taxes - United States and 

United Kingdom ••• o.~oo.eo.G.oo • .,tl •• """o •• " •• "'OG.I).IIO •• , ' 

A. 

13. Lubricating oils ••••••• ""'0.,"".&"." ....... .., ..... ., .... .,""·"°0 •• 

Noncomparable. excises /I /I /I""" (I"" /I."""''' II /I" It .. ., .. "'" .. G "' .. ., /I"" /I /I 

A. United StatlGS excises • ., .... " (10.,,,,, /I r ... ., 110 .,.,,, ., 1>".0.,,, /I c).,., /I .... ., 

Business am store machines •••• "" .... 0 .. 0 • .,000 ..... 

Sporting goods ••• 0" •••••••• "' •••• &00"00" •• "..,00.000 

35 

35 

35 

35 

36 

36 

36 

B. B~,i.tish excises ." ••• 60.0" •• " ••••• Go •• aoo.oOOOOOOIllOO 36 

C. 

D. 

Cocoa •••••••• 00&.00000000000000 •••• ..,.000000.0.000 ••• 00000. 

Tea O.Q10"0 •••• "",,, •• oO"ooo.oO •• 4.00.0G6~OO.O ••• Q8 

Canadian excises "o"oo ••• oooO".O.G"'OO-l'lQlI)".G<10~0.0.O. 

Candy, confectioner.f, and chewing gmn •••••••••• 

Soft drinks •• 0000000 •••• 00000"."" •• ""000"".,.,,," •• 0000 

other excises 

36 

36 

36 

36 

37 

37 

Table: Sununary Comparison 

Canadian excises 

of United States, 'Dl'itish, and 

39 

iii 
EXCISE TAXES, 

UNITED STATES, CANADA AND lJ.NITED KINGDOM 

I. Introduc_tJRD.' 

It i? the purpose of this study to compare the excise taxes imposed by the 

central go'vernments in the United Kingdom, Canada and the United States, and to 

indicate in so far as possible the relative tax rates on the taxed articles and 

services in the respective countries., 11 Comparable to the Federal excise taxes 

of the United States are the duties of excise and some of the customs duties of 

the United Kingdom. Comparable Canadian Dominion taxes are the duties of excise 

assessed under The b~xcise Act, 1934, and its amendments, and the excise taxes 

and retail purchase tax levied under The Special War Revenue Act. Excluded' from 

the scope of this study are State excises and sales taxes in the United States, 

Provincial sales and excise taxes in Canada, the Canadian fe,deral manufacturers I 

sales tax of 8 percent, and the British Purchase Tax. 61 

While no consideration is given t'o the United States or Canadian customs 

duties on articles subject to exc.i.ses, it is necessary to refer to the nrHish 

customs dut.i.es where art.i.cles subject to excises are wholly or largely imported. 

In the United States and Canada, excise taxes or excise duties are imposed on 

both domestically produced and imported articles and customs duties represent 

an additional levy upon the imported articles. 21 The United Kingdom, following 

a different procedure, limits duties of excise to home-produced goods and taxes 

imported goods by means of customs duties somewhat higher than the comparable 

excise duties. • 

'['he taxes for all three countries, when not expressed as percentages of 

selling prices, are quoted as dollar amounts per taxable unit. Conversion of 

British and Canadian taxes to United States dollars at the levels of the official 

rates of exchange does not give a completely accurate picture of the comparatiye 

level of the taxes because of differences in internal 'Pl;ices in the three 

countries and wartime controls over exchange rates. Nevertheless, some form of 

conversion is necessary for British duties, and may be made for Canadian dutj,es. 

Official exchange rates offer the most convenient first approximation to {epresentative conversion factors. 

----'-------------

See appended table for a summary of the comparative, rates in 'the three 

countries. 

See Treasury Department study "Considerations Hespecting a Federal Retail 

Sales Tax," the parts on "Canadian Federal Sales Tax," and "British Purchase 

Tax," Hearings Before the Conunittee on Ways and Means, Revenue Revision of 

1943, pp. 1095 - 1272. 

One exception is the tax on beer imported into the United States. Imported 

beer is SUbject only to the customs duty. 
- 2 -

In addition to currency conversion and customs duties' problems, there 

are also other problems of cornparabilitywhich have precluded exact tax comparisons in every case. The data in this study, however, give a reasonably 

accurate view of the excise tax structures in the three countrie;;. 

The following units of measurement are used: 

Pound = $4.00 

Canadian dollar:: 90.9 cents 

Imperial or Canadian gallon = 277.418 CUbic inches 

Wine gallon (standard gallon of the United states) :: 231 cubic inches 

Imperial or Canadian proof gallon = 2'77.418, cubic inches 

containing 57.1 percent of alcohol by volume at 600 F. 

United states proof gallon = 231 cubic inches containing 

50 percent of alcohol by volume at 600 F. 

British hundredweight = 112 pounds 

A wine gallon is equivalent to 0.833 Imperial or Canadian gallon, and 

a United states proof gallon is equivalent to 0.73 TInperial or Canadian 

proof gallein. 

All Canadian specific tax rates are given in terms of Canadian dollars 

unless stated as being in United states dollars. 

British and Canadian tax conversiOlls are rounded to the nearest half-cent 

for arnounts of less than $1 and to the nearest cent for amounts of ~~l or more. 

No reference is made in the text to the years in which the current tax 

provisions were put into effect. In the cas~ of Canada and the United ,,' 

Kingdom these may be ascertained from the footnotes which give the enacting 

or amending laws. Since the legal source for the United States tax pro·· 

visions is the Internal Revenue Code, as amended, originally enacted in 

February 1939; the dates of the latest changes are not indicated by mere 

reference to the law. As an aid to the reader, the footnotes indicate both 

the Internal Revenue Code section and the latest amending Revenue Act. 

II. Comparable taxes - United States, United Kingdom, and Canada 

A. Admissions 

1. General adm:l,ssions 

. The United States tax on the anto\U1t paid for admission to any place is 

1 cent for each 5 cents or major fraction of 5 cents. 11 The actual tax 

liability under this provision is equivalent to that which would prevail if 

the tax were 20 percent of the admission price. ' 

11 Internal Revenue Code, sec. 1700(a), runended by Revenue Act 1943, 

sec. 302. (Hereafter, Internal Revenue Code is abbreviated as I.R.C. 

and Revenue Act as R.A.) Persons having the permanent lise or lease of 

box seats are taxed 20 percent of the 'amount for which a similar box 

or seat is sold for individual performances. 

le. 

la. 

la. 

la. 

20. 

2a. 

28. 

38. 

3s. 

t,s. 

4&. 

50. 

59. 

68, 

68, 

18 

18 

18 

18 

le 

2s 

28 

28 

28 

38 

So 
-3-

Entertainments duty of the United Kingdom 

Admission charge , Admission charge , I Duty as a percent of 

(before dut;I'J I 1luty (before'dut;y:) __ I Duty admission charge 

Over 1 Not over 1 Over , Not over, LoNer limitl Upper limit 

British currencY United States currency of bracket , of bracket 

I. Full rateD 

3d. Sd. ld· 

1m 

a ¢ $ 20% 12% 

Sd. 6t· 3/4d• 10 ¢ 12% 10% 

~d. 7 • J.!d. 24% 20% 

7 d. ad. 2d. 1 ¢ 13 ¢ 3 ¢ 28% 26% 

Od. a·3/4d. 3

e

· 13!¢ 14· 6¢ 44% 1,1% 

s-~. 1jd. 7 d. 14 ¢ 17 ¢ 12~ 96% 71% 

1 d. ls, d. a • 17 ¢ 21¢ 

1$ 

aO% 67% 

is. . 1s. 4 d. 10 • 21¢ ~~ a3% 6/{/, 

1s. 4 d. lao ad. 1s. 1d. 27t¢ 21 7a% 64% 

le. ad. ls. 9d. Is. 3d. 33 ¢ 35¢ 25¢ 75% 71% 

ls. 9d. 20. Od. Is. 6d. 35¢ 49¢ JO# 86% 75% 

2s. Od. 2s. 2d. Is. 7d. 4?¢ 1.3i¢ Jli¢ 79% 72% 

2s. 2d. 2s. 6d. 2s. ad. 1.3,¢ 50¢ 40¢ 92% 80% 

20. 6d. 30. ad. 2s. 6d. 50¢ 6O¢ '1 100% 83% 

JB. Od. 30. 5d. 2s. 7d. 60¢ 

~t - 86% 75% 

30. 5d. 40· 2d. JS. 4d. ~~ 66¢ 97% 80% 

40. 2d. 46. lld.4O. 2d. 90 ¢ aJ ~ 100% 85% 

40. lid. 50. 5d. 4s. 7d. 90M $1.08 91 ¢ 93% 04% 

50. 5d. 58. 11d. 5-. Od. $1.08 1.18 $1.00 92% 84% 

It 5 •• lid. 6s. 5d. 5-. 2d. 1.18 1.28 1.03 07'f, 81% 

68. 5d. 66. lld. 5a. lOd. 1.28 1.JS 1.17 91% 84% 

). 68. lid. 56, »:1. for 1.J8 $1.17 for 

the first the first 

6B .nd. and 5d. $1.J8 and 8¢ 

for each 6d. or for each 10¢ 

fraction thereof or fraction 

over 6 •• lld. thereof over 

$1.38 

II. .!leduced rates 

r ~. 5¢ 19¢ 1¢ 20% 5% 

11 d. lao 2 • 19¢ 26¢ 4¢ 21% 15% 

Is. 3 d. ls. 3,d. 26¢ :i!!¢ 6¢ 23% 21% 

ls. 5 d. 1s. 4~. 29¢ 32M 7M 26% 23% 

1s. 7 d. ls. S d. 32M 36¢ 9¢ 28% 2S% 

lao 9Jd. 2s. 6~. 36¢ ')9¢ ll¢ 31% 28% 

la.lit 2s. d. 8 • ')9¢ 41¢ 14¢ 36% 34% 

2s. d. 2s. 3d. 9d. 41¢ 45¢ 1i: 37% 33% 

2s. 3d. 20. 7d. lld. 4* Sl!¢ 18~ 41% 36% 

2s. 7d. 3s. lOd. la, 2d. 51 56¢ 23 ¢ 46% 42% 

2s. lOd. 2<1. la. 4d. 56 ¢ 63 ¢ 26i¢ 47%. 42% 

3s. 2d. Is. 4d. for631t¢ 27¢ for ths 

the fil'st first 63~¢ 

JB. 2d. and and 4¢ for 

~d. for each each li¢ or 

62d. or fl'ac- fraction 

tion thereof thereof over 

over 36. 2d. 63i¢ 

Treaeury Department, Division of Tax liesearoh 
- l, -

The entertainments duty of the United Kingdom is levied on all payments for 

admission to any exhibition, performance, amusement, game or sport, There are 

two sets of duties, designated as reduced rates and full rates. Reduced rate\" 

apply "where all the performers whose words or aotions constitute the enter'tainment are actually present and performing, and the entertainment consists of one 

or more of the following items, namely, a stage play, a ballet, •• , a perf9rmance of music, ' •• a lecture, a recitation, a music hall or other variety 

entertainment, a circus or a traveling show." Y All other taxable payments for 

admission, the most important of which are tbose to outdoor sports and motion 

picture theaters, are subject to the full rateso 

The schedules of British rateB are shovm in the table on page 3, 

British duties generally are much higher than the United states tax. In the case 

of stage plays and c'oncerts, if the admi.ssion charge j.s over 39 cents, the British 

duty averages one and one-half to two t:i.mes the United state',. excise taxo Entertainments chargeable at the full rates, except the very cheapest, are subject to 

a duty in the United J(jngdom two to five t:i.mes as high as in the United Stateso 

For instance, the average admission charge to a motion picture theater in the 

United States is about 32 cents, upon which the Federal tax is 6 cents, but in 

the United Kingdom a comparable admission charge would be taxed 21~ centso 

In Canada the excise tax on the amount paid for admission to any place of 

amusement is 20 percent, y the same, in effect, as the United States tax. 

20 Cabaret!'l..Ll:.oof gardens, and si.milar 

places of entertainment 

The United States taxes at, 20 percent all amounts paid for admission, refreGlm;ent, service, or merchandise at any roof garda", cabaret, or other similar 

place furnishing a public performance for profit. J./ The tenn cabaret, etc., 

covers any public place where dancing privileges or entertainment, except instrumental or mechanical music alone, are afforded patrons in connection with the 

sale of food, refreshment, or merchandise. iJ . 

In Canada an excise ta.x of 25 percent is levied on the charge made to any 

patron of any place of entertainmento 5./ IIPlace of entertainment II means any place 

which offers a combination of any of the following: provision for dancing by the 

patrons, the sale of alcoholic beverages, or entertainment, ... ·ceFt l'llli'ely ~..t;r" 

4ll@~by paid performers. IIChargell means any entrance charge or fee, 

cover charge, charge for meals, services or merchandise, or any other fee or amount 

collected from or charged to a 'patron. Y In effect, the 25··percent tax applied 

Finance Act, 1935, sec. 1 

The Special War Revenue Act, June 1943, sec. 122. 

Public Law 333, 78th Congress, sec, 3. 

I.R.C., sec. 1700(e)(1) amended by R,A. 1942, sec. 622. 

The Special War Revenue' Act, June 1943, seco 134. 

Ibid., sec. 133 (a) and (d) 

to t 

char 

ever 

inst 

and 

Stat 

the 

adml 

c.abJ 

Stai 

on , 

nor 

ria: 

Canl 

Sta' 

'fhi: 

Sta' 
for 

3 

In1e 

cm-

~or 

}8se 

ltish 

ieX'''''' 

to 

10 

ar 

ru-

- 5 -

to the total bill paid by a patron of a placl! of entertainment, so that the taxable 

charges are similar in the two cougtries. There are some slight differences, however, in the types of ent()rtainment or sales that create a taxable charge. For 

instance, provision for dancing in a restaurant which serves no alcoholic beverages 

and which has only instrumental mus'io would create a ta:'{able charge in the United 

States but apparently not jn Canada. In actual practice both lavls produce about 

the same tax base. 

The Brit,ish have no duty on this type of entertainment unless there is an 

admission charge, 1.J1 which case the regular entertainments duty schedule is appli-

'c,able. 

B. ~lcoholic beverages 

1. ]2istiJ.led spiri!§. 

The excise tax on distilled spirits in the United States is :il9 per United 

states proof gallon. 1/ An additional tax of 30 cents per proof gallon is levied 

on spirits (and wines) produced by rectification.?J Neither the United Kingdom 

nor Canada places a tax on the privilege of rectification. 

In the United Kingdom spirits are taxed at the rate of I,7 17s. 6d. per Impe'-

rial proof gallon, 'lithe eqUivalent of $23 per United States proof gallon; 

The Canadian excise duty on distilled spil:its, except brandy, is 1pll per 

Canadian proof gallon, Alar M.03 ($7.30 in United States currency) per United 

States proof gallon. For brandy the duty is $9 per Canadian proof gallon. 2/ 

'fhis is equal to a tax of ~~6,57 (!t5.97 in United states currency) per United 

states proof gallon. 

I.R.C., sec. 2800 (a) (1), amended by R.A. 19!.3, sec. 302. If the product 

is below proof, i.e., if it contains less than 50 percent alcohol, the tax 

i$ ~~9 per wine gallon. \'ihen above proof, the tax is proportionate to the 

alcoholic content. The United Kingdom and Canada follow a different procedure and provide that the tax shall vary in proportion to the proof gallon 

rate for any greater or less strength than the strength of proof. 

I.R.C., sec. 2800 (a) (5). The rectification ta.'{ varies jn proportion to the 

proof-gallon rate for any greater or less strenb~h than the strength of proof. 

Rectification includes a wide variety of processes used subsequent to the ter--

min at ion of the initial production operation to prepare spirits and wines for 

consumption. The processes are described in Regulations 15, Article XXVII. 

Finance Act, 19/.3, sec. 2. This rate is applicable to spirits which have j)'een 

warehoused for at least 3 years. ImmatUre spirits are subject to an additional tax. See Finance Act of 1920, sec. 3(2) and First Schedule, Part III. 

7 George VI, chapter 9, An Act to Amend the Excise Act, 1934, sec. 41. 

Ibid., sec. 43. 
- 6 -

While the above taxes apply to distilled spirits used for beverage purposes, 

all three countries accord special treatment to distilled spirits used.for nonbeverage purposes. In the United states licensed manufacturers of food proe!uyts 

and medicines for internal use are allowed a drawback of i~6 on each proof galion 

of tax-paid distilled spirits used. 11 Alcohol which has been denatured so as 

to destroy its·character as a beverage ane! render it unfit for liquid medicinal 

purposes may be withdravffi from bond tax free. y 

In the United Kingdom domestically produced spirits usee! for industrial 

or scientific purposes" or for domestic heating, cleaning, etc., are exempted 

from duty, while imported spirits used for such purposes in some instances are 

subject to a small customs duty. 'J/ . . 

Distilled spirits· used for non·-beverage purposes in Canada are taxed at 

rates ranging from 15 cents to $1.50 per Canadian proof gallon, 11 cents to 

$1.10 (10 cents to ~~l :ill United States currency) per United states proof 

gallon, depending upon the purposes for which they are used. For instance, 

spirits used in the manufacture of chemical preparations designated by the 

Governor-in-Council are ta.'{ed 15 cents per Canadian proof gallon. Spirits 

used in the manufacture of pharmaceutical preparations and perfumes, however, 

are subject to a duty of $1.50 per Canadian proof gallon. y 

2. Fermented malt li9l!.Q!1'. 

The United states tax on fermented malt liquors is ~~8 per barrel of not 

more than 31 vrine gallons. 2.1 

Beer brewed in the United Kingdom is taxed according to the specific 

gravity of the worts used. The rates per 36 Imperial gallons of worts are 

as follows: §j 

-------------- Duty 

Specific gravity of worts:----------Brrr~i~ls~h~------~----------~O~n~1~t~erld-vS+t~a+t~e~s-----

_____ --""--_____ L:ClllJ.t:.t:.t:reenc...JL-----__ ~t__ ______ _"'_currency 

1,027 degrees or less 

Every additional degree 

in excess of 1,027 

degrees 

;'7 Os. 7~d. 

5s. 2~d. 

Ion.c., sec. 3250 amended by R.A. 1943, sec. J09. 

IoR~C" sec. 3070. 

$28.12 

1.01, 

Thirtieth Report of the Conunissioners of His Ma.iesty's Customs and Excise 

for the Year ended 31st March 1939, pp. 18-19. 

6 George VI, chapter 27, An Act to Amend the Excise Act, 1934, p. 96. 

Ion.c., sec, 3150, amended by R.A. 1943, sec. 302. 

Finance Act, 1944, sec. 1, and First Schedule, Part 1. 

In 

dut 

tim. 

in 

the 

Bri 

hoYJ 

bee 

Bri 

is 

any 

($1 

of 

Can 

sin 

is 

per 

Can 

bar 

pOD 

eon 

cen 

60 

gal 
3aB, 

1-

)tB 

Lon 

11 

- 7 -

In terms of a barrel of 31 wine gallons, the basic rate is $20.17 and the extra 

duty for ,each addiM.onal degree of specific gr§lvity is 75 cents. 

The British duty on beer comparable to United states beer is about five 

times as great as the United states tax. ~Jorts used in the manufacture of beer 

in the United states have a wide range of specific gravities, but apparently 

the most typical have a specHic gravity of 1055 degrees. On this beer the 

British tax would be ~~41.09 per barrel of 31 wine gallons. British beer, 

however, is Ughter than Untted states beer so that actually the tax on British 

beer probably is about three and one-haH times the American tax. A common 

British beer uses worts of 1038 degrees specific gravity 1/, upon whicJ: the tax 

is $28.39 per barrel of 31 wine gallons. 

The Canadian duty on beer or maH liquor, brewed in whole or in part from 

any substance other than maH, is 45 cents per Canadian gallon, Y or $11.62 

($10.56 in United states currency) per barrel of 31 wine gallons. This type 

of beer, while constituting a very small part of the total beer produced in 

Canada, .is the type most comparable to the beer produced in the United States, 

since here both malt and small grains are used in h,·ewing. 

Most beer produced in Canada is brewed from maH with only hops added and 

is taxed on the basis of the malt used. The Canadian duty on malt is 16 cents 

per pound and on malt sirup 2l,.cents per pound. 3J On the usual type of 

Canadian beer the dutJT probably is ~~8.68 ($7.89 in United states currency) per 

barrel of 31 wine gallons. This conversion assumes that on the average 2.1 

pounds of malt are used in the production of a Canadian gallon of beer. !II 

a. Still wines 

The .United States tax on still wines varies according to '~he alcoholic 

content. Wines containing not over JJ+ percent alcohol by volume are taxed 15 

cents per wine gallon; over JJ+ percent but not over 21 percent the tax is 

60 cents: over 21 percent but not over 2/, pe;rcent, the tax is $2 per wine 

gallon •.. !?} 

G. Findlay Shirras and Lo Rostas, 1'he Burden of British Taxation, Cambridge, 

191.3, p. lL,1,. 

6 George VI, chapter 27, An Act to Amend the ~"(Cise Act., 1934, p. 97. 

Ibid. 

Wter of February 9, ·1943, from David SjJll, Commissioner of Excise, (now 

Deputy Minister of Nat10na1 Revenue for Customs and Excise), Dominion of 

Canada. In files of Division of Tax Research. 

In the Un1ted States in addition to the basic excises on wines, a rectif1cation tax of 30 cents per proof gallon is levied on wines processed or 

produced in rectifying plants (I.R.C., sec. 2800 (a) (5)). Only a small 

proportion 'of the wine output is processed in a manner requiring payment of 

this tax (See Annual Report of the Conunissioner of Internal Revenue for the 

'Fiscal Year fuded June 30, 1943, pp. 169, 184. Hereafter, this report is 

citeQ. as Annual Report). . 

:t.R.C., sec. 3030(a)(1), amended by:;R.A.19/,3, sec. 302. Wine contain:h1g 

over 21, percent alcohol by volume is classified as distilled spirits and, 

taxed as such. 
- 8 -

British domestic. still wines are subject to an excise duty of Us. 6d. per 

Imperial gallon, 1/ the equivalent of ~~2 .42 per wine gallon. Most still wines 

are imported, however, and therefore subject. to customs duty rather than excise 

duty. The customs rates are shown in the following table. ?J 

Description of wine sJ Duty per Imperial 

gallon 

1. Non-Empire products 

Not exceeding 250 proof •••••••••• 

Exceeding 250 groof but not 

exceeding 42 proofo ••••....••• ~l 

For every degree or fraction 

thereof above 420 ••.••..•••.••. 

Bottled, additional duty •..••.••• 

.17s. Od. 

Us. Od. 

2s .10d. 

3s. 6d. 

II. Empire products 

Not exceeding 270 proof ••••••.•.•• 

Exceeding 27 groof and not 

exceeding 42 proof ••••.••...•• ~l 

For every degree or fraction 

thereof above 42° •...........•• 

Bottled additional dut •••••.••• 

a Proof is Imperial proof. 

ISs. Od. 

lOs. Dd. 

2s. 6d. 

2s. 6d. 

Duty per 

wine 

. : gallon 

$ 2.83 

5.66 

.f,7 

.58t 

$ 2.50 

5.00 

.4?-i 

.41.-

The Canadian excise tax on wines containing not more than 1.0 percent of 

proof spirit is 50 cents per Imperial gallon, 1I or 41t cents (38 cents in 

United states currency) per wine gallon. Wines cannot be fortified to a 

strength exceeding f,O percent of proof spirit, y that is, an alcoholic content 

of 22.8 percent by volwne. 

Because of the differences in the classification of wines the tax rates 

in the three countries cannot be compared exactly, but the comparison in the 

folloYfing table is fairly accurate. 

il Finance Act, 1943, sec. 4(1)(b). ?J Ibid., sec. 3, and Third Schedule. 

~ The Special War Revenue Act', June 1943, sec. 83 (1) (a). 

~ Circular No. 220-0, 2nd Revision, September 8, 1938. 

All 

NI 

O' 

l 

O' 

"0'. 

~ 2/ 

Un 

'l'h 

co 

Oa 

st 

fo 

fr 

$:; 

C6 

Me 

tl: 

du 

c! 

(~ 
)er 

,s 

_se 

- 9 -

.-~-------. -

Description 

of wine 

; ---' -.-- -------c-a-n-ad-a--'I'ax ,per Wl",,' n",e'-...tg",aH'2{}n-i-t-ed Kingdo-m-aT--

United canadian: united states Empire Non-Empire 

; states currency: currency .2E..o.<i..u.c,ts .: __ .~oduck-__ 

Alcholic content: 

Not over 14% ~~ .15 $ 

Over 14% but 

not over 21% .60 

Over 21% but 

not over 24% 2.00 

iY. Wine imported in buDe. 

~ Not over 15.4% alcohol. 91 Not over 22.8% 31cohol. 

.41~ $ .38 $ 2.50 ]V $ 2.83 

.41·~ .38 5.00 5.66 

·41i 21 .38 21 5.00 5.66 

-----._--------.-._---

About 70 percent of the tax-paid withdrawals of still wines in the 

United states contain over 14 percent but not over 21 percent aloohol. 11 

The tax on this wJne is 60 oents per wine gallon. 'fhe British ta..""{ on 

comparable wille is generally about eight or nine t;JfieS as great. The 

Canadian ta.."C is a.bout one-third less. 

b. ~Fkling wines. 

On each bottle or other contain?r of natural sparkling wine the United 

states excise is 15 cents per half pint or fractiona.l. part of a half pint, and 

for artificially carbonated wines the tax is 10 cents pel' half pint or 

fractional part. y These rates are approximately equivalent to taxes of 

$3 and (~2 per wille gallon. 21 -

The British excise on domestic sparkling wines, whether artif:Lcially 

carbonated or not, :i.s .,1 lOs. per Imperial gallon !±/ or $5 per wine gallon. 

Most wines consumed in the United Kingdom are imported, however, and 

therefore subject to cus-toms duty rather than excise duty. The basic cus-roms 

·dut;!.es vary according to the a1.coh01io content of the wine and are the same 

as those for still wines. In addit,10n, a special customs dutJ' is levied on 

spark11ng wines. libr non-Empire products the duty is Ll 2s. Od. per Imperial 

gallon, and for Empire products, 158. 9d. per Imperial gaJ.lon. 21 1'hese 

rates are respectively equivalent to ~~3.67 and ~~2.62 per wine gallon. 

In Canada the tax on sparkling wines, whether naturally or artificially 

carbonated, is $2.50 per Imperial ga1l,:m1 f;j the equivalent of l~2.08 

O}1.89 in United states. currency) per wine gallon, 

11 Annual Report, 19/,3, p. 177. Y I.n.C., sec. 303(a)(2), amended by!l.A. 1943, sec, 302. 'If the wine contains 

over 2L, percent of alcohol by volume, it is classified as distilled spirits 

and taxed as such, with a fewexcepti6ns. 

4

21, The average nwnber of half-pint units per wine gallon is twenty. 

frI_ -Finance Act, 191+3, sec. 4(J.) (a) • V. Ib1d., sec. 3, and Third Schedule. 

'§! The Special Wap Revenue Aot, June 1.943, sec. 83(1) (b). 
- 10 -

The comparative tax rates in the three countries are given in tabular form 

below: 

Tax per wine gallon 

_. Unj,ted states Canada United Kingdom 

Description of vrine : United Non-

:Naturally iArtificially:Canadian, states :~npire : Empire 

:carbonated:carbonated ,currency, currency:produets: products 

Alcoholic c.ontent: V 

Not over 15.4% ~~3.00 ~p2.00 $2.08 $1.89 $5.12 $6.50 

Over 15.4% but 

net over 2ltro{, _. 3.00 2.00 2.08 1.89 7.62 9.33 

ij No differentiation by alcoholic content is applicable in the United States or 

Canada. ------------------ 4. Liqueurs and cordial.s 

Liqueurs and cordials generally are considered to be a type of distilled 

spirits and are taxed as such in Ce.nada and the United Kingdom. In the 

United States liqueurs and cordials are subject to the taxes on the distilled 

spirits and wines used in their production, and also are subject to a container fee included in the group of taxes on wines. 11 If the liqueurs and. 

cordials are prepared from distilled spirits plus certain designated types of 

wines fortified w:i:l;h brandy made from the srune fruits or ber1'ies as the wines, 

the products are subject to two taxes: (;l.) a container fee or 10 cents !)er half 

pint o~' fractionaJ. part, and (2) the taxes on the still wi.ne and distilled 

spirits contents. ?-J The taxes on stiD. Tlines and distilled spirits are those 

preViously outlined. Y Because of the container fee, "alich in actual practice 

amounts to about $2 per gallon, most liqueurs and cord:l.als are no·!; made from 

still wines fortified wJ.th theil' respective brandies. Instead they are prepared in one of three ways: (1) from distilled spirits, (2) from distilled 

spirits and unfortified wi.ne, and (3) from distilled spirits and still vrines" 

for~ified wUh b~'andies 'made from fru:Hs or berries other than those from 

which the wine was made. In these cases the finished products are subject to 

the rectification tax of 30 cents per proof gallon y and the distHled 

spirits and v;ines used are subject to the respective taxes on these products. 

The tax on the distilled spirits is usually the most important element of 

the tax on liqueurs and cordials J so that the method of taxation in the 

United States in p~'actice is not greatly different from that in Canada and 

the Unil;ed Kingdom. . 

;V In the United States cordials and liqueUl's are defined as products obtained by mixing or redistilling distilled spirits ,'lith or over fruits, 

flowers, plants, or pure juicest.herefrom and to .. mich sugar or dextrose 

or both have been added in an amount not less than 2i'J percent by weight 

of the finished prodUct. Regulations 5, sec. 21, class 6. 61 I.TI-C., sec. 3030 (a) (2), amended by R.A. 1943, sec. 302. 

y Supra. Brandy used for the fortification of wine is not subject to the 

distilled spirits tax, but wl19n added '~o wine is taxed as still vline. 

y loR.C., sec. 2800(a)(5). 
lm 

1-

lre 

lOts 

50 

)_3 __ ( 

lS or 

" lalf 

e 

ce 

-11-

The British excise duty on liqueurs and cordials is the same as the duty 

on distilled spirits, that is, b7 17s. 61. per Imperial proof gallon or $23 

per United states proof gallon. 

Canada also classifies liqueurs and cordjals as distilled spirits and 

taxes them at the rate of $11 per Canadian proof gallon or $8.03 ($7.30 in . United states currency) per United Sta;~es proof gallon. 

Comparative tax rates on these products are difficult to obtain because 

of the wide variety of effective rates vhich may oocur in the United States. 

The foD-owing example indicates the possible difference in rates. The 

United States tax on a wine gallon of benedictine, which contains about !,i, peccent alcohol, is 26 cents for rectification' and $7.92 for the distilled 

spirits used, or a total of ~~8.l8. The British duty on a comparable product 

is $20.24 per wine gaD-on, while the Canadian duty is ~p7.07 ($6.43 in 

United S'~ates currency). 

c. ~soline 

The United States Federal excise tax on gasoline is lt cents per gallon.!! 

Nearly all inotor fuel (gasoline and diesel oil) used in the United Kingdom is imported or prepared from impor~ed petroleum. The customs duty on 

hydrocarbon oils (petroleum Oils, coal tar, etc.) is 9d. per Imperial gallon, 

rut there is a rebate of 8d. per gallon on I(heavy oil" used for purposes other 

than fuel in motor vehicles. Y Therefore, gasoline, Vd1ich is a "light oil," 

and diesel oil, ,.,hich is a "heavy oil" but not eli~ib1e for the rebate, are 

subject to the full duty whioh is equivalent to 12)) cents per Wi.ne gallon. 

Not only is the British tax on gasoline slightly over eight times the 

United states tax, but diesel oil is taxed. This product is nct subject to 

an exciso.tax in the United states or Canada. 

Alcohol used for making motor fuel is taxed at the same rate as gaso':' 

line, 9d. per Imperial gallon. 21 

The Canadian excise tax on gasoline is 3 cents per Imperial gallon, !J 

or about 2t cents (2.3 cents in United states currency)· per wine gallon. 

D. Matches 

In the United states the excise tax on matches is 2 cents per thousand, 

excel1~ing fancy wooden matches and wooden matches with a col.ored stem which 

are taxed 5t cents per thousand. 2/ . 

I.R.C., sec. 3412 (a), amended by R.A. 1941, sec. 521. 

Finance Act, 1938, sec. 1. 

Ibid., sec. 3. 

The Special War Revenue Act, June 1943, sec. 80, and Schedule H. 

I.R.C., sec. 3409, amended by R. A. 1941, sec. 547~ 
- 12 -

Matches manui'actured in the United Kingdom are taxed as follows: y 

Duty 

For every 1,000 containers in which there ;lre 

not more than 10 matches ..................... . 12s.0d. 

~'Ol' every 1,000 containers in which there are 

1110re than 10 but not more than 30 matches.. hl . 168. Od. 

For every 144 containers in which there are 

more than 30 but not more than 50 matches •. 

For ewn'Y 144 containers in which there are 

lUore than 50 matches: 

For the first 50 matches •••.•••.•••••.•••• 

1"01" every additional 5 matches or fraction 

thereof in excess of 50 matches •••••••• 

And so in pl'0portion for any less nwnber of 

containers 

8s. 4d. 

8s. 4d. 

10d. 

. If the containers are filled to the mro6llUlm level permitted for each 

classification, the British duty amounts to from 23 to 24 cents per thousand 

matchos. 

The stamp tax on matches in Canada is as follows: V 

Per package of 

Less than 21 matches 

21 to 25 matches . 26 to 30 matches 

31 to 50 matches 

Over 50 matches 

Tax 

1/5¢ 

1/4¢ 

3/10¢ 

1/2¢ 

1¢ for each 100 matches 

or fraction thereof 

For a thousand matches the Canadian tax is 10 cents (9 cents in terms 

of UnHed states currency), if the packages are filled ·~o the limit for 

any one tax class. 

11 Finance Act, 1940, sec, 4(2), and Fcurth Schedule, Part II. 

y The Special War Revenue Act, June 1943, sec. 76(1) and (2). 
nd 

- 13 -

E. Meohanical lighters 

Meohanioal lighters sold in the United States are not taxed unless they 

are made of, or ornamented with, preoious metals or imitations of precious 

metals in whioh oase they are subjeot to the jewelry tax of 20 peroent of 

retail sales prioe, 11 

The exoise duty on meohanioal lighters in the. United Kingdom is 

2s. 6d., 61 or 50 oents, per lighter. 

Canada taxes meohanioal lighters at the rate of 25 peroent of the manufaoturers' . sales prioe. 21 

Ji', Playing cards 

Playing cards are subjeot to a United States exoise tax of 13 oents for 

each,pack of not more than 54 cards. ~ 

The. British duty of exoise on playing oards is 3d. (5 oents) per pack. 21 

The Canadian exoise tax on playing oards is 20 cents (lB oents in 

United states currenoy) per pilOk of not more than 54 cards. y . 

G. Issuanoe and transfer of stock and bonds 

a. Issuance 

Fbr the privilege of issuing oorporate bonds and similar seourities, the 

United states imposes a stamp tax of 11 oents on eaoh $100 of face value or 

fraotional part of $100 of eaoh bond. '11 

The United Kingdom's stamp tax on the issuanoe of bonds varies·aooording 

to the type of seourity •. Registered bonds. and debentures are subject to the 

following duties:gj 

I.R.C., seo. 2400, amended by R.A. 1943, sec. 302. Imitations of preoious 

metals inolude plated ware and alloys of preoious natals. 

Finanoe Aot, 1940, seo. 5(2). . . 

The Speoial War Revenue Aot, August 1942, sec. BO, and Sohedule I. 

I.R.C., seo. 1807, amended by R.Aa 1941, seo. 531. 

This rate has been in effeot sinoe 1862. . Thirtieth Report of the Commissioners of Ilis Majesty's Customs and Ex:oise for the Year ended 31st March 

1939, p. 104. 

The Special War Revenue Aot, June 1943, seo. 82. 

I.R.O., seo. 1801, amended by R.A. 1941, ·seo. 521. 

United States Department of Conrneroe, Company Law and Business Taxes in 

Great Britain, Washington, 1933, p. 117. 
\ 

Face value of bond 

British currency : United States currency!l!., ;13ritish: 

ExceedingtNot exceeding:Exceeding~Not exceeding :' ctlrrency'" 

lO 10 

Is 10 25 

25 50 

50 100 

100 150 

150 200 

290 250 

250 300 

For every hlOO or fraction thereof.in excess 

of h300 

\~ 40 

$ 40 :1..00 

100 200 

200 400 

400 600 

600 800 

(l00 1,000 

1,000 1,200 

For every $400 or fracUon thereof in excess 

of $1,200 

3d. 

8d. 

15. 3d. 

21>. 6d. 

3s. 9d. 

5s. Od~ 

65. 3d. 

7s. 6d. 

25. 00. 

J)uty 

United States 

currency 

~~ .05 

.1313 

.25 

.50 

.75 

1.00 

1.25 

1;50 

.50 

Bearer bonds are liable to a duty sixteen times the ba$ic duty on registered 

bonds and debentures, that is, 43. for every Q.O or frl.).ction Of hlO or 80 

cents for every $40 or fractional part of $40. Y Strictly speaking, the 

above taxes apply to IImarketable securitiesll made or issued by or on beh8J.f 

of any company or boc)y of perl>ons, corporate' or incorporate, whether .domestic 

or foreign. The term "marketable securi tieslt, is belieV'ed to encompass ordinary bonds and debentures. ?J . 

Complententing the tax on marketable securities is the duty payable on 

the issuance of Itloan capital, II 25. 00. for hlOO or fractional part of liOO. 21 

The term "loQ.n capitalll refers to funded debt of any type ot.~er than marketable 

securities as well as to mortgages and other sim:i.lar legal covenants. Unlike 

the United States t8..,,(, whlch is levied only on corporate bonds, the BriUsh 

tax is applicable to municipal securities and loans. 

The basic tax of 25. 60.. per LlOO levied upon loan capital and registered 

bonds is equivalent to 12!3 cents per $100 ano. is only slightly higher than 

the similar tax in the United Statefl. But the tax on bearer bonds is equivalent to ~~2 per $100, or more than eighteen times the United States tax. 

Ibid. 

The exact scope of the term is unkno\'m because the regulatio~n3 are not 

available. " 

United States Department of COllUlll3rce, 2£. cit., pp. 115-116. 
I 

e 

- 15 -

Canada does not tax the issuanoe of bonds. 

b. Transfer 

Transfers of oorporate bonds, inoluding gifts, are taxed by the 

United states at the rate of 5 cents pel' $100 of face value or fractional 

part of $100 of the aggregate value of the bonds. y. 

The British stamp duty on transfers, and inter yivos gifts of registered bonds and debentures, that is, "marketable securities, II is as 

follows: ?J 

Value of transaction Dut;y 

British United States' : Bri.tish United states 

currenc;y currenc;y curren0;'l currenc;y 

Not exoeeding !. 5 $ 20 Is. $ .20 

" " MO 40 2s. .40 

" II !.15 60 3s. .60 

1/ II t.20 80 4s. .80 

II 1/ 1.,25 100 5s. 1.00 

For every addi- Bbr every additional !.25 or tional $100 or 

fraoti.on thereof fraction thereof 

up to !.300 up to $1,200 5s. 1.00 

For every !.50 or For every if200 or 

fraction thereof fraction thereof 

in excess of !.300 in exoess of 

$1,200 lOs. 2.00 

There is no transfer tax on bearer bonds. 

The relative level of the United states and British transfer taxes 

depends upon the relationship between the faoe value of the bond and its 

selling prioe. When a bond of $1,000 face value is transferred at its 

faoe value, the United states tax is 50 oents and the British tax is $10. 

If the bond sells for less than its faoe value, the United states tax 

doef) not ohange, but the British tax decreasesj and \\hen the bond costs betv~en $20 and $60 the tax is approximately the same in both countries, 

50 cents in the United States and 40 or 60 oents in the United Kingdom. 

i7 I.R.C., seo. 3481, amended by R. A. 1941, se~. 521j Regulations 71, 

seo. 113.33, 113.63 • . ?J United states Department of Connnerce, 212.. oit., p. 118. 
- 16 -

The Canadian strunp tax on transfers of bonds, 3 oents for evel~ $100 

or fraotional part of ~floo of '~he par value of eaoh bond transferrred, is 

40 peroent ]e ss than the United States tax. Transfers of Dominion and 

Provinoial bonds, inter vivos gifts, and gifts to religious, charitable 

or educational institutions are not taxed. V 

a. Issuance 

Corporate stock (including stock of investment trusts) is taxed in 

the United states at the time of issuance at the folloWing rates: ?J 

'fYFe of stock Tax 

Par value stock............. 11 cents on eaoh $100 of par or faoe value or 

fraotion thereof of the certificates issued 

No-par-velue stock.".a) 

b) 

11 oents on each $100 or fraction thereof of 

the actual value of each oertifioate, y,here 

the actual value of each share is $100 or more 

3 cents on each $20 or fraction of the actual 

value of each certificate, where the actual 

value of eaoh share is less than ~~lOO 

The British stamp duty on corporate stock is lOs. per 1100 of the 

nominal stock capitalization of the company. 2! The tax is payable upon 

the registration of a neVi company or the authorization of an inorease in 

the capital stock of an existing oompany, and therefore is not strictly 

comparable to the tax in the United states \'hich is levied only when 

stock is issued. The British tax also is applicable to the amount 

contrilxtted by limited partners to limited partnerships. 4/ In terms 

of United States currenoy the British tax is e~uivalent to 50 oents per 

$100 or about four and one-half times the United States tax on par value 

stock. 21 

There is no Canadian exoise tax on the issuance of stock. 

y. The Speoial War Revenue Act-;June 1943, Part VII. Y LR.C., sec. l802(a), 8.mended by R.A. 1941, scc. 521; Regulations 71, 

sec. 113.33. 21 Finance Act, 1933, sec. 41(l). 

~ Ibid., seo. 4l(2). '21 No-par-value stock is rarely used in the United Kingdan. 
- 17 -

In the United states, stock transfers, including gifts, are taxed as 

follows: V 

-------------- Type of stock . -------.. -----~ 

Par value 

No-par-value 

5 cents on each l~lOO of par or face value or 

fraction thereof of the certificates. If the 

selling price per share is ~~20 or over, the 

rate is 6 cents. 

5 cents on each share. If the selling price 

per share is $20 or over, the rate is 

6 cents. 

---------------_._---_.-

" Transfers for a consideration and inter vivos gifts of stocks in the 

Unitod Kingdom are taxed under the same SCi1edule of rates as transfers of 

registered bonds and debentures. 

The United states tax on transfers var:ies for par value stock according 

to the par value of the stock and the selling price,. "hile for no-par-value 

stock the t3X varies according to the selling price. The British t~ 

varies according to the actual value of the transaction. In the case of 

par valu", stock, the United states tax is always less than the British tax, 

unless the stock sells for less than one-twentieth of its par value, in 

·,lhich· case the relative level of the taxes is reversed. For instance, 

a hlUldred shares of $lO_par_value stock sold at par are subject to a tax 

of 50 cents in the United states md $10 in the United Kingdom. If the 

same stock is sold for 40 cents per share, the tax is still 50 cents in 

the United States but only 1,0 cents in the United Kingdom. No-par-value 

stock is rarely used in the United Kingdom so .that a comparison of the 

taxes on this type of security has little meaning. However, to complete 

the comparison it may be noted that for no-par-value stock selling for 

less than $5 per share the tax in the United Kingdom is less than in the 

United states. g/ As soon as the price exceeds $5 per share, the British 

tax rapidly exceeds the United states tax because the former varies according to the selling price and the latter is a fixed levy per share. 

A transfer of a hundred shares of no-par stock a.t $50 per share ... Quld 

be taxed $6 in the United States and ~~50 in the United Kingdom. 

17 I.R.C., sec. 1802(b), amended by R.A. 19/.1, sec. 521 • 

. y Round-lot transfers ass\llOOd. 
- 18 -

'rhe Canadian stamp tax on stook transfers varies aooording to the 

selling price, or value fOl' which the stock is t1'ansferred, as 1'ollows: V 

Sales price per share 

Less than ~~l 

$1 or over but not more than $5 

Over ~p 5 but not over j~2 5 

Over, $25 but not over $50 

Over jp50 but not over $75 

Over $75 but not over $150 

Over $150 ' 

Tax per share 

1/10 of 1% 01' sales price 

~¢ 

1¢ 

2¢ 

3¢ . 

4¢ 

4¢ plus 1/10 of 1% 01' 

sales prioe in exoess 

of $150 

Seourities oonsidered "stock" include oapital stook, mineral deeds, 

oil royalties, syndioate units and fixed investment trust shares 01'1 any 

assooiation, oompany, fund or trust. The Canadian tax is broader in its 

applioation than the United States tax, 1'dJioh is applicable only to 

shares 01' corporations, investment trusts, and similar organizations. 

1~axablo transfers in tho United States include gifts, but the Canadian 

transfer tax does not apply to gifts of many type13, as v,as indicated 

above in the oase of the bond transfer tax. 

'rhe United states stook transfer tax rates are sometimes higher, 

sometimes 10;1"'1', and sometimes equal, to the Canadian tax rates. y 

E'or nooopar"value stook, the Canadian tax is lower than the United . 

states tax if the market value per share of stock is less than (~170, 

but the Canadian tax is higher if the market value per smre is in 

excess of $170. YOI' par value stock, the following general statelll3nt 

oan be made: if the stocle 'Sells at its par value, the Canadian and 

Amerioan taxes ere equal for stock selling at ~p275 OJ. share; the 

Canadian ta."{ is greater for stock selling for more than $275 a shere; 

and the United states tax is greater for stook ,selUng' for more than 

$33 a shal:e but loss than ~~275 a share. Where par value stock sells, 

for other t.han its par value or sel1.s for a per value less than $33 

per smre, the tax in the United states may be higher, lower, or the 

same as the tax in Canada. 

The United states excise tax on the manufacture of sugar var.ies 

according to the percentage of pure sugar contained in the product, but 

1/ 'rhe Special War Revenue Act, June 1943, Pert VII. 21 Examples assume round-lot transfers. 
- 19 -

in general the tax is about .5 cent per pound. For ordinary gra,nulat<;ld sugar 

whioh usually tests about 99.8 sugar degrees, the tax is 0.53 cent per pound. 

The exact rates are: 0.465 cent per pound for manufactured sugar testing by 

the polariscope 92 sugar degrees, and 0.00875 cent per pound additional for 

each additional sugar degree. Manufactured sugar testing less than 92 sugar 

degrees is taxed 0.5144 cent per pound on the total sugars therein. 11 

Unlike the British and Canadian taxes on Sltgar, the United States tax is 

applicable only to sugar produced from i3llgar beets and sugar cane. The 

United states tax also provides for a refund of the tax paid if the sugar, 

or any article manufactured therefrom, is "'-sed as livestock feed or for 

the distHlation of alcohol. y 

The British duty on sugar varies according to the purity of the product 

and its geographical origin. The customs duties and home-grown sugar exoise 

are constrllcted so that the consumer, in effect, pays the highest rate of 

duty applicable to foreign refined sugar (23s. L,d. per cwt.) less the 

protective surtax of 28. 4d. per hundredweight imposed to safeguard the 

British refiriing industry.?J Lower tax rates are levied on hOJre-gro\,m and 

Empire sugars, but the consumer does not get the benefit of these rates. 

In practice the lower rates represent subsidies to producers. The effective 

rate of 2ls. per hundredweight is equivalent to 3-3/4 cents per pound. 

111e tax rates on various classes of sugar are as follo"ls: The excise 

duty on hOm'l-gro\'.r\ sugar varies from 16s. 3d. per hundredweight on sugar 

testing over 99 sugar degrees to 7s. 5.1d. per hundredweight on sugar of 

a polarization not exceeding 76 degrees. !J/ The tax amounts to 3 cents 

pel' pound for ordinary granulated sugar. 

'Ehere are three schedules of C1).stoms duties on imported sugar. The 

taxes per hundredweight for sugar of a polarization exceeding 99 degrees are: 

23s. 4d. for sugar in general; 17s. 6.8d. for sugar entitled to the general 

preferential rate; and 14s. 0.7d. for colonial sugar. 2/ These rates are 

equivalent to dutie.s of 4 cents, 3 cents, and 2i\- cents per pound. y 

The Canadian tax on sugar varies from 1 to 2 cents per pound, the tax 

on refined cane and beet sugar being 1 cent (.9 cent in United States 

currency) per pound. 71 

V I.R.C., sec. 3490. This prOvision was originally part of sec. 402 of 

the Sugar Act of 1937. 

Y I.R.C., sec. 3494. This provision was originally part of sec. L,04 of 

the Sugar Act of 1937. JI Shirras and Rostas, 22' ~., p. 118. 

~~. Finance (No.2) Act, 1939, sec. 6, and Fifth Schedule, Part III. 

,!j, Ibid., sec. 6, and E'ifth Schedule, Parts I and II. 7iI Coionial S1,lgar, although subject to a 10Vier rate than home-grown sugar, 

does not monopolize the market since its importation is restricted by 

a quota system. See Thirtieth Report of the Commissioner of His 

Majestyl s Customs and Excise for the Year ended 31st March 1939, p. 62. 7J 1'he Special Vial' Revenue Act, June 1943, sec. 80, and Schedule II; 

Order in Council P. C. 545. See also Commerce Clearing House, 

Canadian Tax Service, 93-226 to 231. 
- 20 -

As was indicated before, the British and _Canadian sugar taxes are more 

comprehensive than th3 United States tax. The United K:Lngdom taxes roolasses, 

glucose, and saccharin, while Canada taxes glucose-and grape sugar, corn 

sugar, ./il~;SSes,. and all' othel' formS of sugar. 

I. Tobacc~oducts 

1. Cigarettes 

'l'he excise tax on cigare-~tes in the Uni'~ed States is $.3.50 per 

thousand, ? cents per package of tv,<3nty, for Cigarettes 1\eighing not more 

then 3 pounds per thoosand. On cigare'ttes ~leighing over 3 pounds per 

thousand and not more than 6it inches in length, the tax is 1~S. 40 per 

thousand; if over 3 pounds per thousand and more than 19" inches in length, 

the tqx: is ~n. 50 per thousand, counting each 2"3/4 inches or fracUonaJ, 

part of 2-3/1, inches of the length of each as one cigal'ette. 11 The 

effective teJ( rate is $3.50 per thousand since cnly a fraction cf one 

percent of an cigareUes weighs mcre -than 3 pounds per thousand. ?J 

'l'he British excise on manufactured tobacco products is in effect 

the cus'toms duty on imported umnanufactured tobacco, for -the production 

of -tobacco in the United Kingdom is practkally nil, 21 and imports of 

mamfactul"od -t;obacco products are uni."'flportant. !J Customs dutios on 

unme,nufuctured tobacco are as follows:_ 21 

-~-'--- -~~c------;- ____ Du~'yyer pOlmd _,. __ ~ __ 

Description of tobacco _ -=-",,:frX'itish currencL......! __ .!h.....S. clJf£ency_ 

F\.J.ll : l'rcfel'entiaJ, F1l11: Preferen- , ----------' rate8._-'--___ rs:tes : rat.es '- tia1 rates 

Cont.aining 10% or more of 

mOisture 

Unstripped ....... , ..... , hI 156. 6d.b1 13s. llfid. ::17.10 

Stripped ................ b1 153. 6~. bl 138. lJ.-7/Gd. 7.11 

containing less than 10% of 

moisture 

Unstripped •••• , • , • • • • . •• bl 16s. 6d. bl II,s. 9fid. 

St'),'lpped. '" , ••• , .•.••• , f,1 168. 6M. b1 14s. 9-7/Gd. 

'1.30 

7.31 

D I.R.C., sec. 2000[C)(2), amended by l1.A. 1<)42, sec. 605(b). 

Y ~!lnual Report, 1<)43, p. 133. 

'j) Shirras and l10stas ,£E., cit., p. 127. 

!xl Ibid., p. 133. Y Finance Act, 1943, sec. 5(1), and li'6urth Schedule, Par-~ I. 

~f6. 79 

6.80 
- 21 -

In order to minimize the duty, importers bring in as much as possible 

of the tobacco vdth a moisture oontent,just slightly above 10 percent. 

Therefore, the effective rates of duty on tobacco are about $7.10 and ~~6. 71 per pound for non-Empire and Empire products respectively. 

Most tobacco used in British cigarettes is non-Empire leaf 11 and 

thus is taxed at about $7.10 per pound. It has been estimated that in 

the period 1941-42, 520 small-sized British cigarettes or 420 middle- , sized Cigarettes weighed, cine pound. Y On this basisi the British duty 

per thousand small cigarettes is $13.65, or nearly 272 cents per package 

of t~enty, and on middle-sized cigarettes it is $16.90, or 34 cents per 

'package. The actua;!. duty, of course, is somewhat less because a small 

amount of Empire tobacco is used. Popular prtced brands of United States 

cigarettes are comparable in terms of weight to the middle-sized British 

cigarettes and, consequently, the British cigarette duty is almost 

five times the United states tax. 

Canada imposes the following taxes on cigarettes: 

a. An excise duty: 21 

1) 

2) 

.;' 

of $6 per thousand on Cigarettes weighIng 

not more than 2~ pounds per thousand, 

of ~~ll per thousand on oigarettes weighing 

more than 2ft pounds per thousand, 

b. An excise tax of 2 cents for each 5 oigarettes 

or fraction of 5 cigarettes in a package. 91 

Tlus is equivalent to a tax of $4 per thousand. 

The minimum excise in Canada for cigarettes weigh:i.ng 2ft pounds or 

1Less per thousand iI is therefore $10 per thousand ($9.09 in terms of ' 

United states currency) ,or 20 cents (18 cents in terms of United States 

currency) per paclc of 20 oigarettes, but the tax is more than $10 per 

thousand if the, packages do not contain an exact nultiple of '5 cigarettes. 

Apparently a certain proportion of the packages do not contain the number 

of cigarettes necessary to produc~ the minimum tax. §/ 

£( Shirras and Rostas, £E. ~., p. 127. 

Y rid., p. 132. J! George VI, chapter 27, An Act to Amend the Excise Act, 1934, p. 97. 

1;) The Special War Revenue Act, JUne 1943, sec. 80, and Schedule II. 

y The p0p11ar brands 0:(: oigarettes in the United States. weigh on the 

average about 2~ pound~ per thou~and. 

§/ Federation of Tax" AdJ,ninistrators, Tax Administrators News, Febl~ary 1943, p. 21. ' 
- 22 -

2. Cigars 

'l.'he United States excise tax on small cigars (weighing not more than . 

tlU'se pounds pel' thousand) is 75 cents per thousand. V Small cigars are 

of minor importance .and need not be considered for comparative purposes. ,?:/ 

On cigars weighing more than three pounds per thousand the United States 

tax varies according to the intended retail price and ranges from $2.50 

to ~~20 per thousand. y 

'£he schedule of rates is given in the following table: 

Intended retail price per cigar: 

___ -"O.:..ve""r Not over 

2M 

I, ¢ 

6 I' 

8 ¢ 

15 ¢ 

20 ¢ 

21.,1 

21~ 

4 ¢ 

6 ¢ 

8 ¢ 

15 ¢ 

20 ¢ 

Tax per 

thousand 

$ 2.50 

3.00 

4.00 

7.00 

10.00 

15.00 

20.00 

The British dutJ' on cigars depends upon the customs duty on 

unmanufactured tobacco since most cigars consumed in the United Kingdom 

are produced from imported tobacco. The customs duty varies according 

to the source of the tobacco and, since different brands of cigars vary 

greatly in weight, it j,s difficult to compare the 1evies on cigars in 

the Uluted Kingdom with those in the United States. However, some 

approximations can be essayed. The average quantity of unstripped leaf 

tobacc'o used per thousand large cigars manufactured in 19/,2 in the 

United States was 24 pounds. y If British cigars average the (lame 

v,Bight of leaf, the duty Vlould be about $171.47 or $163.98 pel' 

thousand, 17 cerrbs or 16t cents apiece, depending on vmether all 

non-Empire or Empire tobacco was used. It is quite likely tha:b the 

high rate of tax has the effect of keeping the weight of the cigars 

used in the United Kingdom below the average of those used in the 

United States. The most popular cigars in the United States sell 

for between 2ft cents and 4 cents, and between 4 cents and 6 cents 

apiece. '2.1 The taxes on these cigars are 3 and.4 mills pel" oigar, 

respectively, or approximately one-fortieth to q~e-sixtieth the 

I.R.C., sec. 2000(0)(1). 

Annual Report, 1943, p. 133. 

I.R.C., sec. 2000(0)(1), amended by R.A. of 19/+2, sec. 605 (c)(l). 

~! neport, 19/,3, p. 121-

In the fiscal year 1943 about 25 percent of the tax-paid 

vrlthdravia1s were in the 2t-to 4-cent prioe bracket am 50 peroent 

in the 4·-to 6-oent braclee"\;. 
23 -

probable taxes on British cigars. It should be noted that cigars are not 

a popular fonn of tobacco consumption in the United Kingdom, and that less 

than 1 percent of the total consumption of tobacco is used in cigars, 11 

In the United States, over 10 percent of the tobacco is so used. 

Canadian taxes on cigars comprise an excise duty and an excise tax 

The excise duty is a flat rate o.r $3 (~~2.73 in United States currency) per 

thousand cigars, '6:./ anL\ the excise tax vilries from $3.25 to ~~55 ($2,95 to 

$50 in United States currency) per thousand according to the manufacturers' 

selling price. 3/ In detennining the value for excise tax purposes the 

excise duty of ~3 is required to ba included in the manufacturers' ~e1ling price, 

Ii. comparison of Canadian and United States excises may be Triade by 

using manufacturers I prices (net af-t;er discounts and excise taxes) 

prevailing in the United States and computing the United States and 

Canadian taxes on the selected prices. Although manufacturers' prices 

undoubtedly are not the same in Canada as in the United States, this 

method gives a good approximation of the relative magnitude of the 

taxes; The table on page 24 indicates that the Canadian taxes are 

appreciably greater, in several cases over three times those in the 

United States. 

3. Manufactured tobacco an9,.Jl_nuff 

Smoking tobacco, chiming tobacco, and snuff are taxed by the Unitep. 

States at the rate of 1S cents per pound. 6/ 

These products are taxed in the United Kingdom at about .u 13s. 111lct. 

or $6.'79 per pound, tha-t; is, the customs duty on Emp:lre leaf containing 

10 percent or more of moisture. The rate on Empire leaf is used in this 

case because these products are mainly made from Empire leaf. Non-Empire 

leaf generally is used for cigare-t;tes. if It is impossible to determ:i.ne 

the exact rate of tax on manufactured tobacco since it varies according to 

the type of tobacco used and the amount of moistening and flavoring agents 

mixed with the tobacco leaf. lPor smoking tobacco J which averages roughly 

80 percent Empire leaf J Y the average tax per pound may be ~1ightly 

in excess of $6."19 because of the higher tax rate on non-Em~:Lre leaf •. 

Available sources of information do not mention the proport:Lon of Emp:t.re 

leaf used in snuff. 

Shirra:san<fRostas, !m • .cit.~ _ p. 125. - 6 George VI, chapter 27, 1m Act to Amend t;~e Exci?e Ii.~t, 1934, P. 9'7. 

The Special Vls_r Revenue Act, June 1943. sec. 80 J and 0chedule II; 

Budget fill.~JlQh delivered by Hon. J. L. Hsley, June 26, 19M,. 

I,R,C" sec, 2000(a). 

Shirras and Rostas,.QV-. ci;t. J P. 12'/. 

1Q:lA. 
- 24-

Canadian arid Unlted states excises on cigm's: 

Rato of tax and tax as a percent of manufacturers' net price 

Manufacturers' :United States: :Canadian:EXcises as a percent of 

net price :retail price· ,United Statestexcises :manufacturers' net I>rA.~ 

JJ : 2J : excise tax , 2/ :United S·tatesr Canada 

----. 

(per M) (per 1\) (per M) 

$ 14.75 2 for 5¢ $ 2.50 $ 6.25 16.9% 42,/+% 

17.70· 3¢ each 3,00 6.25 16.9 35.3 

2/,.60 4¢ each 3.00 9.25 12,2 37.6 

37.40 6¢ each 4.00 16.50 :10.7 41,.1 

41>074 2 for 15¢ 7.00 16.50 15.6 36.9 

52.09 9¢ . each 10.00 16.50 19,2 31.7 

54.68 10¢ each 10.00 16.50 18.3 30.2 

67.62 12¢ each 10.00 16.50 14.8 2/,./+ 

88.31 15¢ each 10.00 16.50 n.3 18.7 

97.11 ;3 for 50¢ 15.00 .16.50 15.4 1'7.0 

nO./.:1 3 for 55¢ 15.00 28.00 13.6 25.1, 

140.41 241 each 20,00 28.00 14.2 19.9 

181.80 30¢ each 20.00 38.00 n.o 20.9 

260,28 3 for $1.20 20.00 58.00 7.'7 22.3 

393.95 60¢ each 20.00 58,00 5.1 14.7 

600,93 90¢ each 20.00 58.00 3.3 9.7 

Treasury Department, Division of 'rax Research 

JJ United States manufacturers' list price less dealers' discounts of 

12 percent and 2 percent> less United States excise tax, Mst prices 

from Office of Price Administration, Maxinnun Price Regulation No. 260. 

?J Maximum Price Re(,rulation No, 260. II Excise tax plus ~~3 excise duty. 
- 25 -

Canada levies an excise duty of 35 cents (32 cents in United States 

currency) per potmd on manufactured tobacco and snuff. 11 In addition to 

the excise duty, there must be affixed~o each packa<7e an excise stamp 

costing 2 cents (1.8 cents in United States currency) for each ounce or 

fraction of an ounce of tobacco contained in the package. y Hence, 

the to·tal tax on a pound of manuf'actured tobacco is 67 cents (61 

cents in United States currency) when the tobacco is packaged in full 

ounces. 'fobacco packaged in containers holding fractional parts of an 

ounce bears a greater tax, For example, the taxes on a pound of smoking 

tobacco packaged in If?-ounce containers are the 35-s:ent duty plus about 

42 cents in st.fJmp tax or a total of 77 cents (70 cents in United States 

curren cy) • 

III, .Q21l!l:§Table ,tax_'lS - United Stats_s and Canada 

The United States and Canada have some excises which do not exist in 

the United Kingdom, Those common to both the United States and Canada are 

outlined below. , 

A. Automoti va vehicles 

In ·the United States the federal excise on passenger automobiles is 

7 percent of the manufacturers' sale s price. ')} 

Automobile s Ijkewise are taxed on the manufacturers' salea prico in 

Canada, The rates of the excise tax are as follows: !J 

--~-.----------------.-. 

___ .,...-!'1",,!a~cttg'ers '....ilaleJL.1lrice : nate of tax _ canad:i,QrLcurrency: United states currency: (In Canadian curroll,,,W;;u)'--__ _ 

~i900 or less (lB18 or less 25% 

Over ~~900 but not 

more tlmn ~)lJ200 

Ove r ~t.l, 200 

$818 but not more 

than ~~l,09l 

25% on ~f900 plus 

40% on the amount 

in excess of ~f900 

25% on $900, plus 

40% on $300, pluB 

80% on the amount 

in excess of $1,:<00 . 

6 George VI, chapter 27, An Act to Amend the Excise Act, 1934, p. -97-, --- The Special War Revenue Act, June 1943, sec. 80, and Schedule II. 

I,R.C., sec. 3403 (b), amended by R. A. 1941, sec. 544 •. 

The Special War Revenue Act, June 1943, sec, 80, and Schedule I. 
- 26 -

'1'hese rates are applicable to passenger automobiles with a seating 

capaci ty of not more than ten persons. 'fhe tax rate on busses is 5 percent. 

The Canadian tax rates are three to four,times the United States 

rate, being 25 percent for cars sold by the manufacturer for j~900 or less 

25 to 29 percent for cars sold for $901 to $1,200, and scnunvhat over ~9 ' 

percent for mcre expensive cars. 

The excise tax on automotive vehicles is much more inclusive in the 

United States than in Canada. The United States tax on passenger automobiles applies also to motorcycles and trailers and semitrailers suitable 

for use in connection with passenger automobiles. An excise tax at the 

rate of 5 percent also is levied on automobile trucks, busses, and truck 

and bus trailers. Furthermcre , automotive parts and accessories, .. /hen 

sold to other than a manufacturer cf automobiles or trucks, are taxed at 

5 percent of the manufacturers' sales price. 11 

B. Cigarette papers and tubes 

The Canadian tax on cigarette papers is 8 cents (7~ cents in United 

States currency) per package of one hundred leaves or fraction of one 

hundred. a! In the United States the tax rate is 1/2 cent per package of 

twenty-six to fifty sheets and 1/2 cent per additional fifty sheets or 

fraction of fifty. 21 

The United States tax applies only to packages contaiping 11\0re 

than twenty-five sheets, and this privilege provides tax exemption for 

about nine-tenths of the cigarette papers distributed in the United States. 

The Canadian "tax on cigarette tubes is 14 cents (12t cents in United 

States currency) per package of ono hundred tubes or fraction of one 

hundred, AI compared y~th the United States tax of 1 cent per package of 

fifty tubes or fraction of fifty. 5/ There is no tax exemption privilege 

for cigarette tubes in the United States comparable to that accorded 

cigarette paperno 

Co Communications Y 

1. Telegraph, cl'ble, and radio messages 

Telegraph dispatches are taxed in Canada at 7 cents each (6ik cents 

I.R.C., soc. 3403 (a)"amended by R. A. 1941, sec, 544. 

The Special Vial' Revenue Act, June 1943, sec. 77A. 

I,R.C" sec, 2000(d). 

The Special War Revenue Act, June 19L,3, sec, nAG 

I.R.C., sec. 2000(d). The telephone and telegraph system in the United Kingdom is part of 

the" Post Office Departnlont. 
- 2'1 -

in United states currency). 11 The United stat,es tax is 25 percent of the 

amoont paid, except that in the case of international messages tha rate is 

10 percent. 61 It appears that the average charge per United States 

danestic telegraph message is about 60 cents; assuming a si.nri.).ar average 

charge per message in Canada, the 7-cent tax ~uuld approxin~te 12 percent 

of the amount paid. 

2. Telephone and radiotelephone messages 

a. Calls other than from coinoperated r-ar stations 

The United States taxes at the rate of 25 percent the amount paid 

for any telephone or radiotelephone message 'when the toll charge is more 

than 24 cents. 'Y The Canadian tax on long distance telephone and radiotelephone Jressages is 15 percent of the charge on all messages costing 

more than 15 cents (13i cents in United States currency) with a maximum 

tax on anyone call of 75 cents (68 cents in United States currency). tJ· 

Available data indicate that about 60 percent of the toll calls 

(nonlocal messages) in .the United States cost less than 25 cents, but 

about gO percent of the expenditurep for puch calls are fOl' mespages 

whioh cost more than 24 cents. The rate of tax on expenditures for calls 

above 24 cents and not over $5 is about 40 percent lower in Canada than 

in the United States and proportionately lovrer on calls costing more 

than ~~5. 

Not only is the United States tax higher on long distance telephone 

calls, hIt there is also a Federal tax of 15 percent on the amounts paid 

by subscribers for local telephone service. Amounts paid for lllany leased 

Ylireservices are taxed at 25 percent. Certain wire and equipment services, 

however, Buch as stocle-quotation and information services, and hlrglaralarm and fire-alarm servIces, are taxed at only 8 percent. 21 These 

services are not taxed in Canada. §/ 

b. Calls :from coin-operated 

pay stations . 

The Callilo.ian tax on long distanoe calls from coin-operated pay 

stations is 5 cents (4?t cents in United States (:ttrrency) per call where 

the charge is from 16 to 45 cents (14fl-41 cents 1n United States currency), 

;v The Special War Revenue Act, June 1943, sec. 25(1). 

g; I.R.C., sea. 3465(a) (1) (n), amendeo. by R.A. 1942, sec. 606, and R.A. 

1943, sec. 302. 

~ I.R.C., sea. 3465(a) (1) (A), amended by R.A. 1943, sec. 302. 

'J:I. The Special War Revenue Act, June 1943, sec. 25(2). 

~ I.R.C., sec. 3465 (a) (2) (n), amended by R.A. 1943, sec. 302. "& There is a Canadian tax of 25 cents (22! cents ln Uniteo. States currenoy) per month on each telephone extension in a o.omestic establishment. 
" 'i 

I' I 

" I 

. I 

- 28 -

and 5 cents for e?-ch additional chqrge of 35 cents (32 cents in United 

states currency) or fraction "f 35 ceatf'!. Here. also, the ri\9.x:inRtm tax on 

one call is 75 cents (68 cents in United states currencY). 11 

In the United States the tax is 25 percent of the charge for calls 

costing more than 24 cents and is computed to the nearest irul1;iple of 

5 cents. ~ . 

United states and Canadian taxes for a selected group of paystation calls are sho.om in the £olloVling table. Monetary units in each. 

case are those of the respective countries. 

Cost 0 £ call Canooian United States 

tax taJI: ~ 

$ .20 $.05 $.00 

.• 25 .05 .05 

$ , .30 , .45 .05 .10 

,.50 .65 .;to .15 

.70 .80 .10 .20 

.85 .15 .20 

.90 1.05 .15 .25 

1.10 1.15 .15 ·30 

1.20 1.25 .20 ·30 

1.30 1.45 .20 .35 

~--.--

If the taxes are compared without converting the Canadian units to 

United States currency, the United States tax :).S found to be the same 

as or greater than the Canadian tax except in the case o£ 20-cent calls 

upon which there is no tax in the United States. The United states tax 

generally is 5 or 10 cents greater than the Canadian tax on the cheaper 

calls, but becomes p!;,ogressively greater on the 100re expensive ones. 

On a $4 call, £or instance, the Canadian tax is 60 cents and the 

United States tax is $1. 

D. Electric, gasJ and oil appliances; mechanical 

refrigerators; and light bulbf; 

In Canada a manufacturers I excise tax of 25 percent is levied on 

specii'ied electric and gas appliances, chiefly of the type adapted to 

Y The Speciel War Revenue Act,-June 1943, sec. 25(2). ' 

Y IoR.C., sec. 3465 (a) (1), amended by R.A. 1943, sec. 302; 
- 29 -

household use. V The lfK)st comparable taxes in the United states are the 

manufacturers' excise at the rate of 10 percent on electric, gas, and oj,l 

appliances, and the similar excise on household-tn:e mechanical refrigerators 

and self-contained air-conditioning units. ?J While the taxes in .the t .. o 

countries cover different articles in a number of cases, many similar 

articles, such as household electric and gas refrigerators, electric and 

gas water heaters, and electric stoves ruld grills, are taxed in both countries. 

The Canadian manufacturers' excise tax of 25 percent on electric and gas 

light fixtures and lamps, shades, and reflectors 21 has no counterpart in the 

United States excise tax system. The United States, however, levies a 20-

.percent manufacturers' excise on electric light bulbs ancl tubes. 4/ 

E. Thrs 

The United states tax on all fur articles and articles of 1'lhich fur is 

the component material of chief value is 20 percent of the retail price. 21 

Canada imposes an excifle tax of 25 percent on the current market value of . 

dressed and dyed furs.' §/ Finished articles imported into Canada and made 

in whole or in part from fur are taxed on the basis of their fur content. ]} 

As a means of comparison it is possible to convert the Canadian tax to 

a retail basis by applying the usual United states trade mark-ups for fur 

garments to the value of dressed and dyed furs. These mark-ups are: fur 

dealers', 10 percent; manufacturers' and jobbers', 40 percent; and retailers' , 

40 percent. loUr merchandise is exempt from price ceilings in Canada so that 

all dealers may, and probably do, calculate their margins on the total cost 

of the furs including the excise t8X. If the value, in Canada, of a group 

of dr.essed furs is $125 (~pIOO -I- $25 tax), the application of the above markups produces a retaH selling price of $288.75. The Canadian tax of $25 is 

equivalent to a tax of 9r, per.cent on the retail price (exclusive of tax) of 

$263.75, provided approximately similar trade mark-ups prevail in Canada and 

the United States. 

Not only is the United states tax about twice as great as the Canadiffil 

tax on all-fur articles, but the difference is further increased by 'the fact 

that the United States tax is imposed on any article of which fur is the 

component material of chief value. On a taxable fur-tr:iJrured coat" therefore, the tax of 20 percent ,of its full retail value is equivalent to more 

thffil 20 percent of the retail value of the fur in the coat. 

b7 'l'he Special War Revenue Act, 2! I.R.C., secs. 3405 and 3406, 

Il.A. 1942, sec. 61/,. 

Juno 1943, sec, 

amended by R.A. 

80, and'Schedule I. 

1941, sees. 546 and 551, 

21 . The Special War Ilevenue Act, June 1943, sec. 80, and Schedule I. 

il LR.C., sec. 3/+06 (a) (10), amended by- R.A. 1943, sec. 302. 

,~ I.R.C., sec. 2401, amended by R.A. 19/,3, secs. 302 and 303. 

'[iJ The Special War Revenue Act, June 1943, sec. 80A. 7J Budget Speech delivered by Han. J. L. Ilsley, June 26, 194/,. 
I 

, 

! 

~'. Jewelry, clocks aDd watches, 

glassware an!!Jlott~ 

- 30 -

Jewelry, including binoculars and certain clocks and watches, is subject 

to a tax of 20 percent of the retail price in the United states. 11 The 20-

percent tax applies to the following articles: all art.icles conunonly or 

conunercially Imown as jewelry; pearls, precious and semi-precious stones, and 

imitations; art1.cles made of, or ornamented, mounted or Htted with, predous 

metals or imitations; watches retailing for more than ~65; clocks, except 

alarm clocks retailing for not more than ~~5; gold, gold-plated, silver, or 

silver-plated vlUre, except flatware; opera glasses; lorgnettes; field glasses; 

and binoculars. Watches retailing for not more than ~~65 and alarm clocks' retailing for not more than ~~5 are subject to a tax of 10 percent of the retail 

price. 

Canada impeses a retail purchase tax of 25 percent on the following 

articles J.f they retail for more ·than ~l: clocks and watches and a1't1.cles 

made in V1hole or in Pal·t of ivory, jet, amber, coral, jade, onyx, or other 

semi-precious stones. The tax also applies'j;o the following if they rotail 

for more than 50 cents: art1.cles commonly or commer¢lally Imo~1l1 as jov,elry 

including d1.aJllonds and other precious or semi-precious stones for personal use; 

goldsmiths' and silversmiths' products; articles of cut glassware, crystal 

glassware, and metal-decorated glassware or marble; and articles of ch1.na, 

porcela1.n, and other pottery ,'mre, except articles for use 1.n the preparat1.on 

or serving of food or drink. The tax 1.S payable by the purchaser ,'lhen the 

goods are delivered by the seller. g/ 

'l~)e Canadian tax is not only 5 percen·tage points h1.gher rut alse is much 

broader 1.n scope than the Un1.ted states tax. Opera glasses, lorgnettes, field 

glasses, and binoculars, hov,evel', are taxed in the United states but not 1.n 

Canada. 

G. Luggage, handbags, wallets, etco 

In Canada a manufacturers' exc1.se tax of 35 percent is imposed on luggage, ')j vmile the United states imposes a retail exc:lse tax on luggage at the 

rate of 20 percent. 41 'l'he items covered by the Canadian and United States 

taxes are muoh the SaJ1le. In add1.tion.to luggage they include such items as 

handbags, wallets, key cases, and toilet cases. In Canada golf bags are also 

subject to this tax, but in the United states golf bags are classif1.ed as 

sporting goods and taxed a.t 10 percent of the manufacturers' sales price. 21 

As a means of comparing the two taxes, the rrargin pennitted w\lOlcsalers 

and retailers of lugga.ge by the Office of Price Administration can be used to 

convert the Canadian tax to a retail basis. Margins on vrallets, handbags, and 

similar articles cannot be used for thi.s purpose, however, since the usual 

YI.H.C., sec. 2400, amended by n.A. 1943, sec. 302. 

?J The Special War Revenue Act, June 1943, Part, XVII, and Schedule VI. JI The Spedal War Revenue Act, June 1943, sec. 80, and Schedule I. 

1J r.R.C., sec. 1651, added by n.A. 1943, sec. 302. 

~ I,R.C., sec. 3406 (a) (1) added by n~A. 1941, sec. 551. 
- 31 -

trade margins are not knol'm and the Office of Price Adminl.stration does not. 

prescribe any uniform mark-up. Ret.ail luggage prices in t.he United Stat.es, 

exclusive of Federal excise, are 182 percent. of manufact.urers I prices. 1/ On 

t.he assumpt.ion t.hat. approximatelY t.he same mark-up prevails in Canada, t.he 

Canadian tax approximat.es a retail tax of 19 percent, This comput.at.ion is 

based ·on an 82 percent. margin exclusive of excise tax, since·Camidian dealers 

are required under their price regulations to compute margins exclusive of tax. 

For example, if the Canadian manufacturers' price is $1, the t.ax is 35 cents, 

and the retail price is $1.82 p;i.us 35 cents tax, or $2.17. 

Photographic apparutus is subject to a 25-percent. manufacturel's' excise 

tax in Canada. V The tax applies t.o cameras, photogl'aphic films and plates, 

and project.ors for slides, films or pictures. These art.icles are t.ax-exempt, 

however, when designed exclusively for industrial or professional photographers' use. 

The United states imposes a manufact.urers' excise of 25 percent ,on 

cameras (exc(lpt camer'as weighing more than four pounds exclusive of lens 

and accessories) and lenses, photographic apparat,us and equipment., and any 

apparat.us or equipment desj.gned especially for use in t.aking photographs or 

mot.ion pictures or in deVeloping, print1l1g, or enlarging photographs or 

motion pict.ures. Unexposed phot.ographic film (includinr, motion pict.ure film 

but not including X-ray film), phot.ographic plates and sensitized paper are 

taxed 15 percent.. 21 The exempt.ion applicable t.o cameras weighing more t.han 

four pounds excludes from the t.ax most cameras designed for industrial or 

professional use. The scope of this tax, t.herefore, is mot'e ext.ensive in the 

UnUed St.ates, although film is t.axed at a lov[er rate than in Canada. 

I. Radio receiving sets and t.ube~-,--phonom:QQh£....ilnd 

record-playing devices ~ 

The Canadian excis(l t.ax on phonographs, record-playJng devices, and 

radio receiving sets and tubes is 25 percent. of the m!ll1Ufact.llrers' sales 

price. AI 

In t.he Un:tt.ed stat.es a tax of 10 percellt of the manufacturers' sales 

price is levied on phonograph records and Illusical instrument.s as well as 

on phonographs, radios and radio t.ubes, and record players •. '2/ 

J. Tires and tubes 

Tires and t.ub(ls are subject to a Canadian manufacturers' excise tax 

of 5 cents (I.~~ cents in Unitec;l states cur'l',;ncy) per pound. Y The j,ax is 

Office of pr:c;e Administration, lfaximuillI'rice Regulation 476, sec. 4. 

The Special Vial' ReVenue Act., June 191.3, sec. 80, and Schedule 1. 

I.H.C., sec. 3406(a) (4), amended by R.A. 1942, sec. 607. 

The Special War Revenue !tct, J\ll1e 194), sec. 80, and Schedule I. 

I.R.C., ·sec. 3404, amended byR.p,. ~941, sec. 545. 

The Special War Revenue Act, June 191.3, sec. 80, and Schedule II. 
- 32 -

computed on the total weight of the articles, except in the case of solid 

rubb'er tires for which deductions are allowed, for the' metal rims or rim 

bases. 11 Tires and tubes may be SQld tax free for use as original bquip:-

ment ,on automotive vehicles of all kinds. If sold with a passenger auto- motile~~ the value of the tires and tubes is incl~ded'in the taxable 

sales price of the automobile -w-,lms- and taxed a minimum of 25 percent. 

When sold with a truck, tires and tubes are not subject to any excise tax 

since there is no excise tax on trucks. ' 

In the United states the manufacturers' excise"on tires is 5 cents 

per pound and on tubes, 9 cent,s per pound.?J The taxes are computed on 

the total weight of these articles, except for the metal rims or rim 

bases of solid rubber tires. V Thus while the excise tax on tires not 

sold as original equipment is approximately the same in the United states 

as in Canada, the United states excise on tubes is about twice as great. 

Tires and tubes may not be sold tax free to automotive mam,lfactu):'ers, 

but upon the sale of an automotive vehicle there is cl'edited against the 

manufacturers' excise tax due on the sale of the vehicle ~ percent of the 

purchase price of tires and tubes when SQld with trucks and busses and 

7 percent when sold with other automotive vehicles. 

It appears that the effective 'rate of the Canadian tax is sommvhat 

higher than United states rates when tires and tubes are sold as original 

equipment with passenger automobiles. 'A 6.00 x 16 I.-ply passenger car 

tire weighing about 21 pounds and a tube weighing about 2.5 pounds are 

subject to United States excises of abopt $1.05 and 23 cents, respectively. 

The manufacturers' sales prices of such a tire and tube are about $6 and 

$1,50 including the taxes and $4,95 and $1;27 excludit\g taxes.!JJ Therefore, the taxe:;; represent apout 21 percent and IH PQrcent, for the tire and 

tube, respectively, of the tire manufacturers' selling prices exclusive of 

tax. The tax on tires and tubes sold as original equipment would usually be 

a slightly smaller percentage of the automobilQ,manufacturers' sales price 

exclusive of tax. 21 In Canada the excise rate on 'similar sales is a mlnlmum of 25 percent, the exact rate depending on the selling price of a car. 

jJ Commerce Clearing House, Canadian Tax Service, 65-931. 

?J I.R.C., sec. 3400 (1) and (2), amended by R.A. 1941, sec. 535. 

21 I.R.C., sec. 3400. 

!JJ . The maximum retail prj,ce for the tlre is about $15 and for the· tube 

$3.75. (Office of Price Administration, Revised Price Schedule No. 63.) 

The manufacturers' prices,including tax, are about 40 percent of the 

retail prices. 

This assumes that the automobile ,manufacturers , sales price includes 

a mark-up on the tires and tubes. The 7-percent credit does not quite 

offset the 7-percent tax but this increase in tax is not proportionately 

as large as the increase in the price of the tires and tubes resulting 

from the automobile manufacturers' mark-up. 
- 33 -

It should be noted that in both countries retreaded tires are taxed 

in the same manner as neVI tires, 11 except that in Canada. the excise tax 

is not collected on tires retreaded for the consumer's own use. y 

K. Toilet preparations 

In Canada toilet preparations are subject to a manufacturers' excise 

tax of 25 percent. 11 The man~facturers' sales price includes not only 

the value of the toilet preparation as such, but also the price of the 

container. ~ In addition, Canada taxes toilet soaps (excluding shaving 

soaps and shaving creams, which are taxed as toilet preparations) at. 

5 percent of manufacturers" sales prices. '21 Neither toilet soaps> nor 

sbaving soaps and creams are taxed in the United states. 

In the United States toilet preparations are taxed at the rate of 

20 percent of the retail sales price. 2/ 

It is possibl'" to make a rough comparison of the Canadian manufacturers' 

excise and the United States retail excise by converting the manufacturers' 

tax to a retail basis as was done in the case of furs and luggage, In 

lieu of information on trade mark-ups for toilet preparations, the provision of one of the Canadian regulations is used. Canadian manufacturers 

who sell such articles direct to the consum0r through their ovm retail 

stores, by mail, or by personal canvass, and who have not established 

manufacturers' sales prices to independent wholesalers, may pay the excise 

tax on their regular list prices to the consumer less a discount of 50 

percent. 11 Assuming a retail list price of ~1, inclusive of tax, the 

taxable amount is 50 cents, and the tax is 122 cents. The effective rate of 

the tax is thus 14, peroent on the ret.ail'price less excise tax (87~ cents). 

L. Transport.ation services 

1. Transportation of persons 

a. Transportat.ion 

In both Canada and the United Stat.es the t.ax on t.ransport.at.ion of 

persons is 15 percent of the charge. §/ The Canadian tax does not. apply 

where the regular one-way fare is 75 cent.s (68 cents jn United St.at.es 

currency) or less, whereas the United states tax applies to fares in 

excess of 35 cents. The United States law also exempts amount.s paid for 

jJ Bureau of Internal Revenue, Cumulat.ive Bullet.in, January-June 1935, 

p. 406. Ret.reading involves recovering both the tread and sidewall of 

the used tires. Recapping, a nontaxable op.erat.ion, consists only of 

adding a new tread to t.he used tire. 

Circular No. 741-C, Second Revision. 

The Special War Revenue Act, June 1943, sec. 80, and Schedule I. 

Ibid., sec. 80(7). 

Ibid., sec. 80, and Schedule I. 

I. R.C." sec. 2/,02, amended by R.A. 1943, sec. 302. 

Circular No. 846-c. 

rhe Special War Revenue Act, June 1943, sec. 32; I.R.C., sec. 3469(a), 

amended by R.A. 1943, sec. 302. 
- 34 _. 

commutation or season tieketsfor~single trips of less than 30 miles, and 

amounts paid for commutation tickets for one month orles8. 11 

b. Seats and berths 

In Canada amounts paid for berths in sleeping cars or for other 

sleeping accommodations on trains are subject to a 15-percent tax, with 

a minimum tax of 35 cents (32 cents in United States currency). Purchasers of Pullman or parlor-car seats are taxed 15 cents 03! cents in 

United states currency) per seat. V The United St,ates tax on charges for 

seats and berths in all types of transport.ation vehicles is 15 percent of 

the amount paid. 2./ 

The United States tax on seats is higher than the Canadian tax only 

when the seat charge in the United States is 90 cents or over. Since the 

average revenue of the Pullman Company per seat, per passenger, for the 

year 1942 was l~1.06 4/, the Canadian tax is equivalent on the average to 

a tax of 13 percent, provided the average seat charge is t.he same in 

Canada as in the United States. 

2. Tran§Q9rt.ation of property: 

There is no Canadian excise on the transportation of property, but the 

United States imposes a tax of 3 percent 011 the amounts paid for the transportation of property by rail, motor vehicle, water, or air from one point 

in the United states to Ilnother~. Coal, however, is taxed 4 cents per short 

ton, and the tax is imposed only upon the first movement of t.he prepared 

coal. The tax is paid to t.he carrier by the perwn paying for the transportation and applies only to amounts paid to a person engaged in the 

business of transporting property for hire. :2/ 

30 Transport-aUo!! of oil by pipe Une 

The United states taxes all transportationby pipe line of crude 

petroleum and liqUid petroleum products at 4~ percent of the amount paid 

for the transportation. The tax is payable by the person furnishing the 

transportation. Provision is made for the determination of the fair value 

of the transportation in cases where no charge for transportation is made, 

or in the case of other than an arm's length transaction. 21 

I.R.C., sec. 3469(b), adtled by R.A. 191.1, sec. 554. 

'The Special War Revenue Act, June 19/.3, sec. 32. 

I.R.C., sec. 3469(c), amended by n.A. 1943, sec. 302. 

Interstate C..9~!:~~29rmni8§..ion, Preliminary Abstract of llailwa,'i. 

§tatistics->-. 191.2 ,~ p. 60. 

I.R.C., sec. 3475, added by !l.A. 1942, sec. 620; Regulations 113. 

I.R.C., sec. 3460, amended by R.A. 19/,1, seC. 521. 
- 35 -

'£horo is no comparable excise in Canada. 

IV. Comparable taxes - United states and United Kingdom 

The United States and the United Kingdom have some excises which do 

not exist in Oanada, Those corman to both the United States and. the· 

United J(iPGdom are outlined below. 

A. Conve;@.nce§~of realt;y: 

Deeds or other instruments whereby realty is sold or transJ'ex'red to 

a purchaser are subject to a star1p tqx in the United States. The t<l-'[ is· 

55 cents on each $500 or fractional part of ~~500 of the consideration 

for, or the net value of, the realty conveyed, but no tax is imposed if 

tho consideration or value does not exceed *)100. 11 Lions and encnmbrance,s 

on tho property before the Gala and not paid at the time of sale ate deductible in determining the not vnlue of ·the property, but no deductions 

may be macle on account 0 f any lien placed upon the property in connection 

with the sale. Y ConVeyances of realty without consideration and bone, 

115l£ gifts are not taxable. :Y 

A deed of any kind is subject to a Iltamp duty of 10s.Od. in tho 

United l(ingc1om.!J Sj.nce this duty of ~)2 is levied on a deed of any value, 

it is more t,han the United States ·tax only when the net value of the realty 

conveyed is less than $1,500. 

Lubricating oils sold in ·the United states are subject to a manufacturers 1 excise tax of 6 cents pel'. gallon. 5/ 

In the United K:i.ngdom nearly all lubricat:i.ng oils are produced from 

importod lwd1'oca1'bon oils which are ta."{ed 9d. per Imperial gallon. Since 

lubricating oils are classed all "heavy oils," they are eligible fox; the 

rebate of 8d. per gallon, making the net tax ld. pel' Imperial gallon or 

about l~ cents per wine gallon. §/ 

V. Nonco.!nparable excises 

A l1lmbel' of articles 01' serv:i.ces are taxed in the United states, but 

not in Canada or the United Kingdom and vice.Y£E2!!. Several of these 

taxes are described below, and a complete list of noncomparable excises 

is given on p. 38. 

I.H.C., sec. 3482, amended by n.A. 19/,1, sec. 505. 

Regulations 71, sec. 113.82. 

Ibid., sec. 113.84. 

Department of Commerce, ~. ill., p. 125. 

I.H,C., sec. 3413, amended bill.A. 1942, sec. 608. 

Supra, p. 11. 
- 36 '"! 

A. United States excises 

1. Business and store~~lQ.~ 

A manufacturers '. excise of 10 pe~'ce!J~ i,8 levied' by the United States, 

on sales of designated business and store machines and parts and accessGries 

when sold in connection "lith '/:;he sale 0:[ those articl<)s. 11 

2. Sport;inJLg~ 

The United States imposes a manu:[acturGl's' excise tax of 10 pe rcent 

en an extensive list of spol'ting goods and 8cluipmen1;.?:J IIlmost all types 

of sporting goods and equipment are taxabl." but special clothing and 

uniforms are not included. 

Bo British excises 

l. ~ 

Cocoa has been taxed by the UnUed Kingdom ;for about throe centuries. 

The pr<)sent duty on raw cocoa is 14s. per hundredweight J/ with a pre_ 

ference for FJrrpire produce of 28. 4d. P(lt' hundredweight.'!J In te1'lllS 

of United states currency the duty runolmts to 21J centsp<;>J;! pound :[01' 

non-Empire produce and 2 cents po l' pOlmd for ]<,mpiro produc e. 

Tea is another long-established source of Ill'itish revenue, having 

firs'~ been ta.'{ed over tJU'ee oenturies ago. lIt the prepent tjme the 

oustoms duty on, tea is Gd., about 13'i cents pel' pound, for a non~)\mpiro 

product and 6d. or 10 cents pel' pound for an Empire product. 21 

C. Canadian excises 

1. Gandy, confectionery. and chewing gljffi 

The Canadian tm<: on manufaoturers' I,lo.los of chewing gum, chocolato, 

<;:andy, and confectionery which may be classed as candy or a substitute 

for candy, is 30 pel'cent. 

To obviate pricing dii'fioulties, spec1fic tu,'Ces of 1, .2, and :3 cents 

are leviod in lieu of tho 30-perc~nt tax on chocolate,. candy, and confectionery articles rogulady retailing at 5 cents, 10 cents, and 15 cents, 

l'especti ve1y. y 

I.R.C., seo. 3406, added by n.A. 19.1,3., sec. 551. 

I.bid. 

l"inance Act, 1924, sec. 2.· 

Thirtieth Report of the COtl)~:i,8sioners of His lc\a,iesty's Customs and 

jo;xcise for tho Year ended Jlst /'ial'ch 1939, p. 5'7. 

Financo Ac:t, '1938, sec. 5. 

The Spocial War Revenue Act, June 1943, sec. GO, and Schodule I. 
37 -

In considering the level of the Canadfan excises on these articles, 

it should be rcmenlbered that the articles require large quantities ~f sugar 

which is also subject to an cxcise ta."{ of 1 cent (.9 cent in .United . States' 

currency) per pound. 

2. Soft drink" 

Carbonated beverages or aerated waters, all other soft drinlcs, 

and unfermented fruit; juices (where the product consists of less than 

95 percent of pure fruit juice), when sold in bottles, . are subject to 

a manufacturers I excise tax of 25 peroent 1/ and an excise tax of 1 cent 

(.9 cent in United States CUl'l'Gl1cy) a bottle.?J The sugar used in the 

manufacture of soft drinks also is subject to excise tax. An excise tax 

of 50 cents (45~ cerr~s in United S'(;ates cUl'I'ency) per pound is imposed 

on carbonic acid gas j,n order to tax 8oda-colmter sales of soft drinks. 21 

If:amliacturers aro permitted to plU'chase carbonic acid gas ta."{ free if the 

gas is to be used in the manufacture of' bottled soft drinks. It! , 

D. QYher excises 

Tho follol'lj,ng table lists the noncompal'able excises, including those 

already described. Tho table is intended only to indicate tho type of 

objects ta.xed; the tax bases ancl rates are no'~ shown. Excises which are 

conceived of as chiefly regula.tory rather tl1'ln revenue measures have been 

omittecl, and for this reason the listing does not include all excises. 

Several taxes are levied on somewhat similar items in two of the 

countries, but the methods of taxc'1.tion are so diverse that the taxes are 

really not comparable. For instance, both Canada and the Un:i:t;ed states 

tax coin-operated amusement devices. The Canadian tax also includes 

vend:j.ng machines. 5J While the Canadian tax is a manufacturers I excise, 

the United states tax is a yearly license fee payable by the persons who 

provide the premises for the use of' the devices. Y Although automotive 

license fees are imposed at the national level in the UnHed Kingdom, 

there is IHtJ,e comparability between the Federal rf5 auto use tax 7J and 

the Dritish fees. The important autDr.1otive license fees are imposed by the 

States in the United States. 

A number of articles subject to excises in the United States but not in 

tho United Kingdom are classified as luxuries in the latter country and are 

taxed under the Purchase Tax at the rate of 100 percent of their wholesale value. Some of the items so taxed are trunks, bags, and wallets made 

of leather; cameras, lenses, accessories, and film; musical instruments and 

phonograph records; clock:3, watches, and jewell"J; toilet preparations; and 

furs. gj 

if The Special War Revenue Act, June 1943, sec. 80, and Schedule I. 

g; ;bid., sec. 80 (9). 

Y Ibid., sec. 80, and Schedule II. 

~ ~., sec. 80(3). 5J The Special War Revenue Act, June 1943, sec. 80, and Schedule I. 

Y I.R.C., sec. 3267, amended by H.A. 19,,2, sec·. 617. 7J I.R.C., sec. 3540, added by R.A. 19L,l, sec. 557. W See Treasury D"partment study, "Considerations Hespecting a Federal Ret.ail 

Sales Tax," the part on the "British Pm'chase Tax," lIearinGs Before the 

Connnittee Ol1_Ylays and !.leans, Revenue Revision of 1943. 
• r-I • N 

• '" • ~ '" ..5 .; • to cl- ~ ~ ~ 

- - -' -- ,,,,'- ," ,', , 

"""",""",,,,<,";'''''~~''''''~'''';''!''~''''>il~!ti~~'''''!~.zji';:i,",i§::;''if%al't 

- 38 -

Noncoll!Parable excises imposed by the United Kingclom, Ca.."l.ada, and the United States 

United Kingdom 

~. Automotive license fees 

2. Bank checks. bills of exchange 

and promissory notes 

3. COCOa 

4. Coffee and chicory 

5~ Dried froi ts 

6. Insurance policies 

7. Silk and artificial silk 

8. Table waters 

9. Tea 

10. Various legal documents 

Canada 

1. Bank checks, bills of excha."l.ge, 

promissory notes, 'money orders, 

and travelers' checks' 

2. Candy, confectionery, and 

chewing gum 

3. Coin-operated amusement 

devices and vending machines 

4. Fountain pens, propelling 

pencils, desk sets,'and 

desk accessories 

5. Pari-mutu.el bets on horse 

races 

6. Smokers' accessories: ash 

trays, pipes, Cigar and 

cigarette holders, etc. 

7. Soft drinks 

United_States 

1. Bo\{ling alleys and billiard 

tables 

2. Business and store machines 

3. Clu.b dues and initiation, 

fees 

4. Coin-operated amusement and 

gambling devices 

5. Electrical energy for domestic 

and commercial consumption' 

6. Firearms, shells and cartridges 

7. Passage tickets for ocean 

voyages to foreign ports 

8. Safe deposit box leases 

9. Sporting goods 

10. Use of motor vehicles and boats 
&l 

I 

-:39-

Bunnna.ry comparison of United States, British, and Canadian excises 11 

Article or service taxed 

1. Admiesions 

a. General adnassions 

b. Cabarets, roof gardens, et.c. 

2. Alcoholio beverages 

a. Distilled spirits 

b. Fermented malt liquors 

o. Wines 

(1) Sparkling 

(2) Artifioially carbonated 

(3) StU I 

d. Rectified spirits and 

,dnes, additional tax 

3. Automotive vehicles 

a. Passenger vehicles 

b. Busses 

o. Trucks 

4. Communi oat ions 

a. Telegraph, oable, and 

radio messages 

b. Telephone and radiotelephone messages 

5. Conveyanoes of realty 

6. Eleotric, gas, and oU 

appliances 

7. FUrs 

8. Gasoline 

9. Jewelry, clocks and watches 

10. Lubrioating oU 

11. Luggage, handbags, wallets, 

etc. 

12. Mntches 

Comparnb1e tax rates 2/ 

Basis of comparison United United Canada 

I States I Kingdom I 

Charge for admission 

Total charge to patron 

U. S. proof gillon 

Barrel of 31 wino gallons (type 

of beer oonuoonly oonnurned in 

the respective oountries) 

Wine gallon 

20;6 

20% 

$9.00 

W:l,ne gallon 1)2.00 

Wine gallon oontaining by volume I 

Not ..,re than 14% alcohol $ .15 

Over 14% rut not over 21% alcohol ~ .60 

OVe>' 21% rut not over 24% alcohol S.2.oo 

U. S. proof gallon 

Manufacturers' sales prioe: 

$900 or less 

Over ~9oolnt not morethan 1)1,200 

Over $1,200 

Manufacturers' sales price 

Manufacturers' sales price 

Charge for domestic messages 25% 

Charge for long distance messages 25% 

$10,000 property $11.00 

Manufacturers' sales price 10% 

Retail price 2o;t 

Wine gallon e .015 

Retail price 2o;ttJ 

Wine gillon $ .06 

Retail price 20% 

Thousand matohes e .02 and 

e .055 

(See footnotes next page) 

$28.:39 

~5.oo-$9.33 

$5;00-$9.33 

$2.42-$3.42 

$2.42-$6.25 

$2.42-$6.25 

JI 

JI 

e .125 

JI 

$ .015 

$ .23 

20;6 

25% 

$8.68 

~2.08 

$2.08 

$ .42 

$ .42 

$ .42 

JI 

25% 

25%-29' 

Over 2< 

5% 

21 

12% 

15% 

25% 

25% 

21 

19% 

$ .10 
-40-

Summary comparioon of United States. Brit1eh, e.nd Canadie.n excises V 

__ Coml2arable tax rates 2Z 

Article or sernoe taxed Basis of comparison , United United Canada I States Kingdom 

13. Playing cards Pack of 54 cards $ .13 $. .05 S. .20 

14. Photographic apparatus 

and supplies 

a. Cameras, apparatus, and 

supplics (except films) Me.nufacturers • sales price 25% 

~ 25% 

b. Films ·l!anufactu rers ' sales price 15% 25% 

15. Radios, phonogl'aphs, etc" 1lanufacture1.'8' sales price 10% ')j 25% 

16. Stocks and bonds 

a. Bonds, registered 

(l~ ISllUance $1,000 bond $1.10 ('fl. 25 ')j 

(2 Transfer at face 

vall.\f~ $1,000 bond $. .50 $10.00 $. .30 

b. Stocks, par ~ue 

(1) Issuance $100 pal.' ~ue share $ .11 $ .50 ')j 

(2) Transfer at par value $100 par value share $ .06 $1.00 $ .04 

17. Sugar Pound $. .005 $ .04 It .01 

18. Tires e.nd tubes 

a. Tires Pound $ .05 

~ $. .05 

b. Tubes Pound $ .09 1\ .05 

19. Tobacoo products 

a. Cigarettes Package of 20 $ .07 $ .275 and 

$ .34 S .20 

b. Cigars Thousand cigars $2.50- $164- $6.25-

$20.00 ~'171 $58.00 

o. Manufactured tobacoo Pound $. .18 $6.79 $ .67 

d. Cirarette papers and tubes 

(1 Papers Package of 100 $ .01 

~ $ .08 

(2) 'lUbes Package of 100 $ .02 (I .14 

20. Toilet preparations Retail price 20% 21 14% 

21. 'rranspol~ation of persons 

a. Transportation Charge for transportation 15% 

~ 15% 

b. Berths and seats Charge for bertha and seats 15% 13% 

'jj 'tile rates shom in this table, in many oases, are those which have been derived subsequent to a 

convel'sion of the actual 9XQise tax in order to place the taxes on a comparable basis. The aotual 

rate and base of each excise tax may be determined by consulting the text of this study. Does not 

include central government Bales taxes, and State or Provinoial and looal sales and excise taxes. 

Y Tax rates of United Kingdom converted on basis of I.l to $4.00. Ce.nadian taxes are in Canadian 

currency. British and Canadian taxes rounded to nearest ~OEflt for amounts of less than $1 and to 

nearest l-oent for SIOOunts of $1 and over. 

y No excise tax. 

~ WatChes retailing for not more than $65 and alarm clocks retailing for not more than $5 are subjeot . 

to a 10-percent rate. 
B 2( 

Canada 

$ .20 

$ .05 

~ .05 

$ .20 

$6.25-

$58.00 

$ .67 

e .08 

e .14 

14% 

15% 

13% 

a 

rmtal 

I not 

~e8. 

I 

Id to 

Ibject, 

- 41 -

Bibliollraphical Note 

Primary sources used in comparing' the excise ~axes of the United 

States with those of Canada and the United Kingdom were the revenue laws 

of the three cOlmtries. In'~erpretations of statutory provisions ,were 

obtained from official regulations, private tax services, and government 

officials. Since excises on certain articles are applied at difforont 

stages of distribution or on different physical units in the three 

countries, it was necessary to use additional sources to put ;such 

excises on a comparable basis. Tho data requirecl to convert these 

excises to cornman bases wel'e obtained in some cases from government or 

trade specialists and in others from official statistics and rrice' regu..: 

lations.. Publications used in p~eparing the text, and cited .thereil), 

aro listed below, 

I. United states 

The revenue law of the United States is codified in the Interna;!,. 

~ue Code, as amended. 

In'berrrotations of the law used in this study were found in tho 

following sources 1 

U. S. TreasUl'y Department, Bureau of Internal !levenue, 

CUJnulativc Bulletin 1935-1, Washington. 

, i: 

___ , Bureau of Internal !levenue, B.egulations, 5 (1940), 1.5 (1940), 

71 (1941.), 113 (1943), \'fashing'Gon.· ,,' 

As an aid in converting 'Gaxes in the different countries to the same 

bases, data from these publications Ylere used: 

Interstate Commerce Commission, Preliminary Abstract of Railway 

Statis tics, 1942 , Washington. 

Office of Price Administration, MaximUJn Pd,ce Regulation No. 260, 

published in jcederal Hegister, Vo1.. 7, No. 218, November 5, ,1942, 

WaBhington. . . ,. 1 

___ , l.!aximum Price Reglj.1ation No. 476, 'pUblished in Federal Register, 

Vol. 8, No. 203, october 13, 1%3, Washington. 

___ , Revised Price Schedule No. 63, published in Federal Register, 

Vol. 9, No. 33, Febhuiry 1.7, 1944, Washirillton. ,'", 

U. S. Treasury Department, Annual lleport of the Conunissioner of 

Internal Hevenue for the Fiscal Year Ended June 30, ~, Wash:Lne'~on. 

. i,i, 
II, United Kingdom 

The revenue laws of the United Kingdom are not codified, 'fherefore, 

the individual finance acts have generally been used to obtain the provisiems of the law relative to ,individual Qxcises. Cited in the text are 

the Finance Acts of 1920, 1924. 1933, 1935, 1938, 1939 (No. 2), 1940, 1%3, 

and 191+4. ._.' .. . 

For some excises·-the law has not been changed for many years, and 

secondary sources were used in lieu of the orii';'inal acts. These documents 

were: 

Board of Customs and Excise, Thirtieth Report of ,the Commissioners 

of His Majesty's Qustoms and ~xcise for the year ended 31st MarQh, 

l2.22., London. 

U. S, Department of COllunerce J Company L3.w and Business Taxes in 

Great Britain, Washington, 1933. . 

A study by Go Findlar Shirras and Lo Rostas J The Burden _9f British 

Taiation (Cambridge, 1943), was used as an aid in determining the level of 

taxes in the United Kingdom for purposes of comparison with tax levels in 

the United States and Canada, -

III. Canada 

Canadian excise tax laws are published by the Departu-ent of National 

Revenue in "office consolidations". However J the consolidations must be 

supplemented by recent tUlconsolidated amendments. For this study the legal 

source materials were: 

House of Couunons Deba:tes, Budget Speech, Vol. LXXXII, No. 85, 

June 26, 1944, Ottawa, 

Order in Councn Po Cn 545, Published in Canadian War Orders and 

Regulations, Vol o 1, .No. 6, February 15, 1943, ottawa, 

Special War Revenue Act, Chapter 179, R, So, 1927, as amended, 

Office Consolidations of August 1942 and June 1943, Department of 

National Revenue, Ottawi'o 

The Excise Act.> 1234, 24-~ George V, Chapter 52 (1934), as amended, 

Office Consolidation of 1939 by Department of National Revenue J 

ottawa; 6 Ge_orge VI, Chapter.m 11 (1942). and 7 George yr, 

Chapter 9 (1943) ° . 

VA consolidation embodying 6 George VI, Chapter 27 is now available, 
- 43 

Published explanations of the provisioIlG of the laws utilized were 

the Canadian Tax Service, Vol, I, published by Conunerce Clearing House, 

Inc" Chicago; and Circ_ulars, No, 220-C 2nd Revision, No, 741-C 2nd 

Revision, and No. 8/h-C, issued by the Department of National Revenue, 

Ottawa, 

Some information regarding Canadian cigarettes was obtained from 

the Tax Admlni!Jtrators NeVIs, Vol. 7, No, 2, February, 1943, Federation 

of Tax Admlnistra·Gors, Chicago. 

'<' ,