Evening journal., 1921-04-13
HISPLAN FOILS
TAX CHEATERS
Honest Man Does Not Suf-
fer Under Sales Levy,
Smoot Maintains
FILIPINOS APPROVE
SYSTEM, HE SAYS

WASHINGTON, April 10. In
commenting upon the Philippine
sales tax, as an example OF the tax
system that he proposes 10 set up in
place Of excess profits taxes, high
surtaxes on incomes and other war
revenue measures. Senator Smoot
explained that the Philippine law
really is a product Of this Govern
ment, worked out 16 years ago. long
before the United States was really
conscious OF any revenue problem
of its own
THE Philippine sales tax" the
Senator said. was put into form by
Joseph Hord then in the service OF
the United States Government He
was sent to the Philippines 10 study
the question Of island revenues. and
he was mainly responsible for the
institution of the sales tax as the
principal revenue producer Of the
islands.
His judgment and work were
sound, as is proved by the results
When the system first framed by him
was put into effect it provided a tax
of only one-third Of l per cent.
Experience demonstrating it TO be
satisfactory, both TO the people and
their government, the tax was raised
to its present level Of 1 per cent
Again, it was demonstrated to be
satisfactory TO the people and their
Government. II is raising more rev.
cnue than all the other taxes levied
in the islands put together. but il
has provoked no outcry and no pro-
In fact they are talking now Of rails
ing it to 2 per cent. and wiping out
practically all Of their other taxes.
At 2 per cent the revenues would
he substantially sufficient TO warrant
the removal Of the other taxes"
What has been tho experience Of
the French with their sales tax -
Senator Smoot was asked.
THE tax in effect there has not
been so satisfactory. because they
have numerous exemptions. The
smallest store there must have a
man to keep track of the articles
subject 10 a tax that are sold Ii
makes for a great amount Of book
keeping and a vast deal Of annoy
ance and confusion. Also, 1t puts
the honest man at a disadvantage. as
compared with the man who is not
absolutely scrupulous. and that
creates a bad feeling. As a matter
Of fact, it puts a burden on an hon
est man TO stay honest.
THE idea Of taxing luxuries en-
ters into the French scheme. A wo-
mans hat. 10 illustrate. may become
luxury when the cost passes a GER
tain figure. Say the figure is the
equivalent Of $40. II the hat sells
for SIS, there is a tax on IS. That
part of the cost is supposed TO rep
resent luxury. Anyone can see how
much bother and actual work will be
necessary in keeping accounts
straigh for taxation purposes under
such a system. Separate calcula-
tons may have TO be made on prac-
tically every article sold by some
stores.
"The Philippine system and the
system that propose for this coun-
try. escape this. Exempting only
certain articles that already are tax
ed and exempting them entirely, and
allowing a general exemption an
nually Of $4,000. my plan would levy
a tax of i per cent. on everything
The merchant could tell at the close
of each day. each week. each month
just what he owed the Government
and he could tell It without employ
ing experts and after a few moments
spent IN calculation.
And it would be impossible for