The times-news. [volume] (Hendersonville, N.C.) 1927-current, 1933-02-10
HANDLING OF
SALES TAX IS
SAID COSTLY
Three Pct. Tax Would Net
About $ll,50O,OO0
Annually
By J. c. BASkERVILL
The Times News Bureau
Sir Walter Hotel

RALEIGH. Feb. l0.--A gen.
cral sales tax of three per cent
on retail sales, now considered as
the most likely rate to be decided
upon by the joint finance COM
mittees to be incorporated in, the
forthcoming revenue bill. VIII
yield on a theoretical basis ar-
proximately $I3,50O,000 a year
in revenue, on the basis of gross
retail sales amount to $3.50
100000 yearly. Eut the cost Of
administering such sales tax
will be SO high. according to
those who have studied the uues-
ton, that not more than SILL
100000 is likely to ever reach
the state treasury should such il
tax be imposed.
The cost Of administering a
general sales tax on retail sales
is variously estimated, ranging
as high as - per cent the fmSt
year. because Of the difficulty Of
collecting such Il tax and the
large number Of tax collectors
that would be- required. The cost
Of collecting the retail sales tax
of two per cent in Mississippi
for the first six months it was il
operation was l.G per cent. But
is pointed out that Mississippi
already had an extensive tax col
lecting organization set up, with
a number CT tax collectors in
every county, so that not much
expansion was necessary to col
lect the sales tax. II is also
pointed out that in Mississippi it
was necessary to collect the tax
from only 1894 taxpayers during
the first six months, while in
North Carolina this number
would be much greater.
Hence if a three per cent sales
tax in North Carolina should
yield i total of $13,500,000 a
year, the cost Of administering
or collecting the tax on basis
of ~ per cent for collection,
would be $l,620,000 year, and
thus reduce the actual revenue
to $ll,980,000 year. How
ever, it is expected that not more
than $l2,500,00O- a year should
be expected from such a tax,
since exemptions and evasions
would reduce the total estimate
BY fully $1,000, 900 a year. Then
allowing $l,50O,0OO off this fig
ure for the cost of collection,
the total revenue would be re-
dueed to only $ll,000,000.
The State Tax Commission,
basing it's figures on the returns
from the Merchants License Tax
of three-twentieths Of one per-
cent, enacted in 1881, est mates
that a per cent sales tax on
retail sales would not yield more
than $9,0O0,000 a year after de-
Quoting the cost Of collection,
allowing for evasions and exemp-
tions. For it is believed that the
very small merchants, doing a
business with gross sales amount
ing to less than $4,000 a year
will be exempted. But even the
most optimistic do not believe
that 8 per cent general sales
tax will yield more than SILL
100000 a year net. This will
barely provide the amount of
new revenue needed to balance
the budget and take over the
eight months school term cost,
which is expected to be done if
a general sales tax is levied.
Since the general sales tax un-
der contemplation now by the
subcommittee of h e joint fl
nance committees is understood
to be very SIMILAR to the. gross
retail sales tax now in effect in
Mississippi, a study of how the
tax is operating in Mississippi
will give same idea Of how the
tax will operate in North, if en-
acted here.
For the first six months the
tax was in operation in Mississ-
ippi, from May |, 1882 to Oct
ODER 81, 1882, total of $685.
1880 was collected from the re-
~ ."