The Washington herald., 1921-04-07
WHITLEY PRAISES
PHILIPPINE FORM
AS TAX SUBSTITUTE
Former Attorney General
Of Islands Confers with
SmoOt and Watson.
SHOULD WORK HERE
Most Economic, Equitable and
Satisfactory Tax There,
Judge Declares.

Judge L. r. Whitley. former At
torney General of the Philippines,
where the gross sales or turnover
tax has been in operation for six
teen years, conferred with Senators
Smoot and Watson yesterday with
regard to the substitution OF that
system Of taxation for the excess
profit tax which will be repealed at
the special session Of Congress con-
vening next week. Because OF mas
familiarity with the gross sales tax
and his many years of observing It's
operations, Judge Wilfiey's views
were solicited by the two Senators
who manifested keen interest In
what he had to say.
JudEe wnney's Views.
Following the conference Judge
wilney said: Il am heartily in favor
of the general gross sales tax OF
turnover tax for the reason that
am familiar with the successful op-
GRAFTON of such a tax in the Philip
pines. After having studied the sit
nation here in the States. i see no
adequate reason why it could not be
made TO work in this country. Prac-
IlCallY All lnC OOyCNNAOhS
AGAINST the plan now wefe urged
against II in the Archipelago when
the law was enacted, but they all
called to materalize in practice. The
Law has been in successful operation
in the Philippine Islands for sixteen
years and furnishes the largest item
of revenue. Secretary! Houston,
short time ago, made inquiry as to
Of ne sales laA
in the Philippines and was ofticialby
advised that il was the most produc-
tive. economic, equitable and salts
factory tax in force on the islands.
The tax originally was one-third OF
1 per cent; it has since been raised
to 1 per cent
Reasons for Fayoring Tax.
NV reason for favoring the
gross sales tax in this country Is
primarily because 1 believe the prin-
, cipal upon which il is based Is
sound and secondly I believe Its
adoption is a necessity. 1t VIII tap
IN. only untapped reservoir OF tax
alton big enough to yield sumclent
funds to meet the expenses OF the
government. and l believe 1t wonio
40 this without interfering VIII
prosperity. Our budget sor a num-
her of wears, at least, will be SO
large that unless the country i
allowed to prosper on a large scale
IL will become a drag on the lhe
of the nation. .h-
'Prosperity in big way is ao-
solutely essential to the meeting
Of these large obligations OF the
government, and this kind of pros
perity will not come to us II we
continue to drain of the prohts
Of business into budget channels
and not permit them to be applied
20 the extension of business ano
kthe creation of new enterprises.
wouId Not UnsettIe Business
1T is said that this gross sales
tax will unsettle the business OF the
country. 1 fail to see how that
lis possible. 1t may give the Dig
Isetf-contained corporations a slight
advantage over their smaller COM
petitors, but at best this will
amount to only about 1 per cent
and this could be covered by spe-
ciaI provision of the law. l be-
Iieve II would be possible for the
law to draw a line between the
VARIOUS SNdBCo VI oa@N
require the big, self-contained cor
porations to pay a turnover tax
which would correspond to that
paid by its smaller competitors. As
a matter of fact. the cost of pro-
duction and indeed the cost of dis
tribution in the various manufac-
turing companies of the country
vary from 5 per cent to IS per cent.
Notwithstanding this, they seem to
be able to get along. / do not
believe the advantage of l per cent,
one way or another. would materi-
ally AFFECT the situation.
Estimates show that m those
cases where the turnovers are
greatest the tax would accumulate
only to the extent of about ~
per cent. Some people think that
In those instances where there are
ten turnovers the tax would amount
to 10 per cent. This is not true,
as the actual calculations show the
average would be 21k per cent. The
experts tell US that We are now
paying 23.2 per cent tax on every
thing we buy. In view of all these
facts. 1 believe the gross sales tax
would be an actual boon to the
consumer. who. after all, pays all
the taxes"
Hord First Suggested Tax.
This marks the second instance
where the Philippines Islands form
Of gross sales tax has been strongly
recommended as a substitute for
the excess profits tax. John s. Hord
president Of the Columbia Credit
Corporation, and for many years a
leading banker of the islands, hav-
ing discussed the merits of similar
taxation through these columns
several weeks ago.
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