The public ledger., 1921-04-25
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PHILIPPINES ARE
QUITE ENTHUSIASTIC
OVER SALES TAX.
Sales Tax Has Proven Great Success
In the Philippine Islands
Senator Sm00t Contends.

washington, ~. Y. - In support or
his plan for sales tax as a source
of revenue after the excess profits
tax has been repealed, Senator Reed
Smoot Of Utah recently gave the Sem
ate brief explanation of his measure
and the reasons on which 1t Is based.
He asserted that the present excess
profits tax adds 29 per cent. to the
price OF goods to the consumer while
ut can be demonstrated with mathe-
matical accuracy that even with half
dozen turnovers, and the correspond
ing one per cent sales taxes, the
price of commodities to the ultimate
consumer is very rarely increased
over three and one-half percent. Com
pared with the merchants and manu-
facturer's ordinary profits on each
turnover of goods. the one per cent.
sales tax Is so small that it was found,
after many years Of experience in the
Philippines that normally in ordinary
commercial transactions very little
attention was paid to the tax"
Speaking particularly of the results
Of 16 years of experience with the
sales tax in the Philippines, Senator
Smoot said
ut has become the most productive
item in the insular tax system.
"It has not hampered any type of
business or manufacture in the is
land; it is precisely during the life of
the sales tax law that commerce and
industry of all kinds have thrived as
never before.
"The Philippine Government is en-
thusiastic over the results of the sales
tax and SO cabled the Secretary of the
Treasury in Washington four months
ago, stating that their sales tax was
the most equitable, productive, simple
and economical tax they had had F.;
that the original tax rate of one third
Of one per cent. had been increased to
full one per cent; and that the Phil
ippine Government was then (Decem-
ber, 1920) considering the advisability
o fagain increasing the tax rate, this
time from one per cent. to two per
cent. turnover.
Prominent merchants with offices
in Manila and New York City have in
printed statements been equally as en-
thusiastic over the operation of the
sales tax laws as is the Philippine
Government, as quoted in the forego-
ing paragraph. Industrial and COM
mercial methods and conditions in the
Philippines have, during the last %
years, become thoroughly. American
lied as score of resputable witnesses
formerly in the Philippines and now
in this country are willing to testi-
fy All Of which should be sufficient
to prove an error in judgment on the
part of those in this country who
have, II scant knowledge of their own
condemned the Philippine sales tax
as being in principle rank economic
hercsy and in operation impracticable
Senator Smoot cites four arguments
in support of sales tax plan of rails
ing revenue: simplicity of assessment
and collection; the taxpayer automat'
ically grades his payment according to
his ability to pay and pays as he goes
along; the tax is low and uniform; the
taxpayer can tell at the close of bust
ness each day exactly where he stands
as to profits and tax liability.
The Smoot plan is before the Fin
ance Committee of the Senate.