The Washington herald., 1921-03-16
PHI LIPPINE STANDS
SALES TAX NDORSED !.
AS NATIONAL. SOLUTION
John S. Hord, Author and Administrators of
Act, Strongly Recommends Laws Now in
Vogue There-Refutes Attacks.

its assessment and collection are so
simple and understandable to even
the most ignorant. Also because
the tax rate being low and not dis
criminatory, all paid and were sat
isfied. The honest merchant had no
nontaxpaying competitors.
3-That its administration would.
judging by past experience. become
a hopeless task. Comment: By
past experience" with the sales
taxes of this country. perhaps, yes;
by past experience" during sixteen
years in the Philippines, certainly,
no.
4-That when the sales tax is
not shifted to the consumer II
threatens the industry compelled to
pay II, and when 1t Is shifted to
the consumer lie Is unjustly COM
pelled to pay a tax now paid out
Of the corporations excess profits.
Comment: (a) Normally like air
other taxes on personal property.
the sales tax is necessarily shifted;
Cb) the excess profits tax of this
country has been paid all along by
the consumer. not by the corpora
tions, and this is precisely the rea-
son why its repeal is almost uni
tversally recommended. Therefore
there can be no attempt. by means
Of sales tax, to shift a burden to
a back which has borne IL all along
and still bears 1t.
5-Thatl IL (a) is unsound eco
nomically land politically; tb) would
injure or destroy different manu-
featuring interests: (c) is unadapted
to commercial manufacturing and
Industrial conditions in this coun-
try. Comment: Sixteen years ex-
perience has proved its all around
soundness in the -Philippines-at no
period in their history have the
Islands been so prosperous as they
have since their sales tax law was
enacted: (d) the manufacturing in
dustries of the Islands, both for
domestic consumption and export.
have never reached such high
levels: (e) during the twenty odd
years of American occupation of the
Philippine Islands their CONNER
cial, manufacturing and Industrial
conditions have been made, IL not
Identical, certainly very similar to
those obtaining in this country:
Furthermore the assessment and
collection of sales taxes in the
Philippines are based on a few sim
pie. fundamental methods which
exist and control everywhere in this
world where goods, wares and mer-
rhandise change ownership.
6-That the pyramiding of costs
due to the sales tax. would double
the price of commodities to the
consumers. The following words
are used by one Congressman:
TT is certain that a l per cent
turnover sales tax would be pyra-
mided so that in a half a dozen
or ten turnovers the padded price
in each turnover sale would make
ballooning of prices as wild in
character and as burdensome in ef-
feet as were wartime prices.
This increase of 100 per
cent in price, or $50 per cent tax in
crease, is submitted as a fair ex-
ample of the workings of a sales
tax. with increased price added for
every turnover. Comment: Clearly
the Congressman. in the foregoing
computation. made the proposed
sales tax responsible for the various
profits imposed and compounded by
the various handlers OF the goods
between the manufacturer and the
ultimate consumer. The problem.
however. Is not to ascertain what
increase in price the proiteers en-
route retained for themselves, be-
cause that type OF pyramiding exists
now. will continue IL the sales tax
Is imposed. and will still continue
even though the sales tax were re-
pealed. u
The real problem Is: How much
more is the ultimate consumer
obliged to pay because of the exist
ence Of the sales tax? To get the
correct answer we should aid 1 per
cent of the price charged by the
manufacturer to 1 per cent of each
of the various prices charged in
succession by each Of the middle
ment including the retailer who
sells to the ultimate consumer.
By using this simple formula and
estimating an average profit of 80
rer cent on each of a series of turn
overs from the manufacturer to the
ultimate consumer we find that:
On three turnovers the price of the
goods, because of the tax, will be
Increased to the ultimate consumer,
1-3 per cent; on four turnovers
AS per cent: on i've turnoyers
; $50 per cent.
We found in the Philippines, after
long experience, that the sales tax
burden to the ultimate consumer
would normally range between 2h
than 2h per cent it was due to the
TO speculation and to the unusual