Evening star., 1932-05-21
The Sales Tax i'm Canada
Levy on Manufactured Merchandise Made Easily
CoHectable by accurate Systems
of Bookkeeping.

numer of categories, all pertaining 10
partly manufactured goods which are
sold for further manufacture following
tax payment. Producers OF articles
which are imported free may also claim
a deduction if it can be shown that
the Canadian article is at disadvan-
tage over the imported article because
of the added sales tax.
Payment of the sales tax is made
monthly, within 80 days of month for
which returns are filed. Penalties are
provided for failure to make returns
and for lateness. Records and books,
under this act, have to be open for in
spection by government auditors at any
time.
There are two ways in which the
sales tax may be charged. One is by
a separate entry showing the amount OF
sales tax. This is the most preferred
way Of showing the tax and the easiest
in making out returns. There is one
criticism of this method by retail mer-
chants, and that is that some small
retailers forget this item on their bill
when computing their selling price. In
this way they are liable to absorb the
tax as part of their profit.
The other manner in which the tax
is computed, is as percentage OF the
selling price of the article, the two
items appearing as one on the state
ment to the retailer. This has caused
considerable confusion, since many
firms do not mention whether their
selling price includes sales tax or
whether the sales tax will be added
as a separate item. 1t has another
angle. Where the sales tax is included
in the selling price, the wholesaler
makes his returns on the cost price
plus overhead plus a reasonable proflt.
This method of making returns is
allowed but is not always the sales
tax percentage cf the selling price,
since the selling price may have been
carried to the nearest round figure
after the sales tax has been added to
cost. overhead and profit Thus an
article which has been computed as
selling for So carries a sales tax of
81 cents. But the wholesaler would
probably charge the retailer $3.50, the
tax return then not being quite correct,
allowing for a slight profit on the tax.
Retailers are wary of bills in which
the sales tax is included knowing well
that there Is some additional profit
included.
Provision for Branches.
WDeTe IlTIUS operating uIlueI SdlcS
tax licenses also operate branches
returns may be made from the head
office. A copy of the head office license
may be granted to the various
branches. Goods sold to branches shall
be taxed on the same price that such
goods are sold to independent Gus
toners, the act states. This does not
give any advantage to a large organi-
Zation which manufactures, distributes
and sells to the public throughout its
own departments or subsidiaries. When
in 1880 the tax was raised to per
cent, a regulation was inserted and
made applicable for a few days which
would have given a decided advantage
to large chain organizations. But the
opposition to this scheme was so great.
whereas there was none in connection
with the raise in the tariff, that this
clause was quickly recalled. The
government pointed out at the time
that it did not want to infiict undue
hardships on business, though It held
that its scheme would bring in more
revenue. Pleasure at the fact that there
was no opposition to the 3 per cent
raise in tariff accompanied the state
ment.
Experience over the years has
eliminated much of the friction
caused at various times in connection
with this tax, and the tax Is now
easily collected.