The Washington herald., 1921-07-04
CANADIAN SALES
MEASURE CREATES
MUCH CRITICISM
Yield Does Not Come Up
To Dominion's Ex-
pectations.
LAW IS OVERRATED
Has Received Much Advertis-
ing, But Income Tax Bet
ter Fills Bill.
LAW is OVERRATED
Especial csrrsspendsnos d The w.shingtoa
HsrsA and tie y. Z. Evsnins Pest)

OTTAWA, July 3.-The discussion
in the United States, over taxation
Ia being followed with much inter
est in Canada. there being a natural
curiosity to see what methods
would be relied upon to produce
the greater part of the large
revenues required. Interest is stnl
further increased because Canadian
action in such matters will be
strongly influenced by that of the
United States. *
II is noticed that not nearly as
much has been said recently about
the advantage of the sales tax. This
was bound to happen the more the
subject was inquired into. 1t was
equally certain that the more the
Canadian sales tax was Investigated
the less would it he favored in the
United States by those desirous OF
finding an alternative major source
of revenue for those that have been
used.
Sales Tax Disappoints.
1t is true that during the last
fiscal wear Canada raised about $43,-
100000 through the sales tax. 1t
may also be added that during April
the collections fell to 100000 or
at the rate of s36.00o,ooo a year
on last years rate. A / per cent
rate levied on the Canadian plan In
the United States would yield about
$4,000. 900. That is to say. IL would
not yield more than about per
cent of the revenue required.
A study Of the results OF Canadian
taxation methods during the last
year will bring one to the conclu-
sion that net the sales, but the in
come tax Is by far the best revenue
producer. During the last fiscal
year the income tax collections
amounted to s47,ooo.0oo. This year
a new method of payment in the
| form of four instalments was
| adopted, and the first instalment
brought in not less than s3s,500, 600.
The indications are that for the
full fiscaI year the income tax, col
lections will amount to 100000. 600
and will come very near to ~equall-
| ing the customs collections. from
which by far the greater part of
Canada's revenue has been received.
Ineome Tax Preferred.
1t is worthy of note that the in
come tax has made good in a sur
prising manner at a time when the
results from the sales tax have been
disappointing, the latter having
fallen away from $5!000.00o a month
in October last to less than $1,000
900 in April. With the Increase in
the sales tax rates. which came into
operation in May. collections should
advance, hut 1t is now considered
that the total collections from this
source will hardly do more than
make good the loss in customs
revenue.
Until very recently the sales tax
received almost all the advertising
and the income tax very little which
may be explained by the fact that
the first two years collections from
the latter were very small. so much
so. indeed, that many began to con-
tend that it would never produce
the results desired. On the other
hand. the sales tax started out very
well but failed to do anything like
live Up to expectations. '-s'
The income tax has produced the
surprising results it has during the
taxes were falling dowp7 SO. badly
because 1t has touched the real
source of, surplus wealth. Those
who pay the income tax have a
proved income: moreover, in the
case of a: very large proportion oi
such persons their income has moi
been adversely affected by the de.
cline in general business. because
it has been derived very largely
from bonds bearing a relatively
high rate of Interest over Ions
period. Moreover, as Canada Is abb
sorbing a much larger proportion OF
her own issues than she used to do
the number of income tax, payers |.
naturally increasing r Besides, tn,
collecting machinery is all the tim,
being perfected. =. 7...-. ~
The sales tax collections .hav,
been disappointing because taker
on sales at time when prices hav'
been very much -deflated, tn,
natural effect has been to ~reduc'
the value of sales, or the yer,
things on which the tax is collected
Moreover, the natural reluctance t,
buy has been increased by the in
crease in cost represented by tn
tax The net result is that the re
ceipts from the sales tax are disap
pointing because they are ,beini
taken from a gradually declinini
volume of business. -, ,ss-