Evening star. [volume] (Washington, D.C.) 1854-1972, 1940-11-03
Increase in Price
OF Imports From
Britain Expected
New Purchase Tax Goes
In Effect; Linen Makers
Are Apprehensive
BY OLIVER MCKEE.

BY OLIVER MCKEE.
AS a result of the new British pur-
chase tax. which went into effect
October 81, higher duties probably
will be imposed on many goods i'm
ported from the United Kingdom,
with a corresponding boost in the
cost to American consumers.
Under section 400 of the 1880
Tariff Act, the purchase tax is "a
part of foreign market value of goods
if such or similar goods would be
subject to the tax If sold in the home
market in chargeable transaction,
Commissioner of Customs William
r. Johnson announced yesterday.
On goods subject to ad valorem du-
ties, the foreign market value is the
yardstick used in determining the
amount of the tariff.
Although Commissioner johnson
has made it plain that the purchase
tax is part of the foreign market
value of British goods which would
be subject to the tax If sold in the
United Kingdom, the Treasury will
consider the facts in each case. IN
der the law, the foreign market price
of merchandise is defined as the
price at which such or similar mer-
chandise is freely offered for sale to
all purchasers in the principal mar
kets of the country from which ex-
ported" If goods exported to the
United States are of type not
freely" offered for sale in Great
Britain, the purchase tax will there
fore not be included as part of the
foreign market valuation.
The possibility of higher customs
duties has caused particular appre-
hension among linen manufacturers
Of Northern Ireland, according to re-
ports reaching Washington. This is
a large and important industry. With
the elimination of European mar
kets, the Irish industry has become
increasingly dependent on exports
to the United States. Northern Ire
land accounts for the greater part of
the British production of linens. In
recent years the United States has
taken about so per cent of the Brit
ish output.
Applies to Retail Sales.
Since the British purchase tax ap-
plies only to retail sales of linen in
the United Kingdom, and is not a
levy on production, spokesman for
the Irish linen industry contend that
the American duties should be based
on wholesale valuation, and that the
foreign market value" as computed
by the Treasury, should not include
the new tax Wholesale prices have
not been increased. In support of
this contention, it may be pointed
out that the tax has been officially
characterized in Great Britain as
essentially a consumers tax levied
at the wholesale-retail stage The
Treasury, so far, has made no spe-
cific ruling with respect to imports
of Irish linens.
Shipments of linen to the United
States from Northern Ireland in Au-
gust were valued at $3.50 227, as COM
pared with s753,133 in August, 1899.
Exports from January through Au-
gust were valued at s6,945,131, an
increase of more than ST ,000,0 in
value over the figures for the cores
ponding period last year.
Because of the war. the British
linen industry is facing difficulty in
securing the needed supplies of fax.
Russia is the worlds largest pro-
Queer of fax, accounting for ap-
proximately four-fifths of the world
output. In recent years, many Eu-
ropean countries have increased
their production and the British
government is seeking to expand
sources of supply within the empire.
With the Nazis controlling the
greater part of the continent, Brit
ain no longer can obtain fax from
Europe.
The United States produces COM
paratlvely little high-grade linen.
Imports from Northern Ireland con-
sist, for the most part, of better
quality linens, and for this reason
offer little serious competition to
American industry.
Two Chief Detectives.
The new purchase tax, considered
at length in Parliament, has two
main detectives. One is to provide
additional revenue for the prosecu-
ton of the war, and the other is to
reduce the consumption of luxury,
or semi-luxury goods Goods covered
are divided into two groups, first
those subject to the basic rate Of
331s per cent of the wholesale value,
and. second, those subject to the re-
duced rate of 1923 per cent. whole
sale value" is defined as the price
exclusive of taxi which the goods
would bring on a sale made by a
wholesaler selling in the open
market in the United Kingdom to
a retail trader at the time when
the tax on the goods becomes due.
Although exports from the
United Kingdom are not subject to
the levy, the tax will be considered
by the treasury as part of the for
eign market value and this means
an increase in the cost to the con-
sumner of many goods imported from
| the United KINGDOM, The HIGHER