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42
Japan will be in higher ratio to wages than in Great Britain. In the accounts previously referred to the following results were found.
Wages
Per cent. of Conversion Costs. 51.6
Repairs to Machinery, Building, Lubricating Oil, etc., Post- age and Stationery, Leather and Mill supplies, Finishing expenses, Salaries and wages other than above (it is not clear whether Directors' salaries are included in this item, but this would appear to be so), dormitory expenses (for girl employees) and sundry expenses Power costs
32.6 15.8
100.0
The value of the combined output on which the above is cal- culated is approximately £5 million per annum and the ratio of total wages to output is approximately 10.75 per cent. This con- version cost is a complete one, i.e., it includes every process from the raw wool, or rags, to the finished cloth.
66. Other costs, not previously included are :—
1. Wool Oil, Dyes, Chemicals, Soap, Soda, etc.
2. Transport, packing, travelling expenses, Commission on
sales, advertising,
Warehouse
costs
and
(apparently for faulty goods) to customers
allowances
Per cent. on output. 3.60
1.70
3. Insurance presumably Fire
.18
4. Employees health insurance
.33
5. Taxes, actually paid (other than consumption tax)
.17
1.44
1.85
2.72
4.35
13.64
6. Taxes, reserve for (other than consumption tax)
7. Depreciation
8. Interest on loans
9. Consumption Tax (see note)
HI
Notes.-1. It will be observed that Consumption Tax,' although nominally 10 per cent., works out at 4.35 per cent. actually paid. As no reserves for this item appear in the accounts, it seems correct to suppose that Japanese makers actually pay less than 10 per cent. on their output. This supposition is borne out by information received from various outside sources. It must be borne in mind, that on imported goods the 10 per cent. Consumption Tax is levied on the landed price, which includes duty and charges. Consequently the native maker gets extra protection beyond the normal tariff in this way.
2. It should be noted also that if the drawback of Consumption Tax obtained by the Japanese exporter is 10 per cent., which we are given to understand is the case, then the difference between 10 per cent. and the actual tax paid, is, in effect, a subsidy on exports,
The period over which the foregoing accounts extend is the half year to middle of 1930, when the industry was distinctly less prosperous than in previous years. It is probable, therefore, that
4
*
43
these costs are higher in ratio to output value than under normal trading conditions.
67. Municipal taxes in Japan are levied on the assessments to national taxes, with the exception of a comparatively insignificant Buildings Tax (at present 9.37 per cent. of the annual value of buildings), and a Land Tax (at present about 3 per cent.
"
of the annual value of land). The national taxes are:-
Income Tax
Business Profits Tax
Excess Profits Tax
Land Tax
1
5 per cent. on Net profits. 3.6 per cent. on Net profits. The first 10 per cent. profit on total Capital employed including reserves, etc., is free and the next 10 per cent. is subject to 4 per cent. E.P. Tax-the next 10 per cent. to 10 per cent. E.P. Tax and any further surplus to 20 per cent. E.P. Tax.
24 per cent. of annual value of
land.
The effect of the above is a sliding scale, varying from approxi- mately 81-8 per cent. tax on profits up to 10 per cent. on capital, to say 21-22 per cent. on higher profits up to 30 per cent. on capital. All taxes are a charge against profits and not an appropriation. By reason of the municipal taxes following the national assess-
local rates ments, a business pays
according to its profits and in the event of losses or no profits being made, it
local pays no rates." There is consequently no dead weight charge for taxes or rates to be allowed for in the costs of its products.
"
The relief to a business which is passing through a period of bad trade or in the non-profit working stages of development is obviously very considerable.
MARKETING COSTS.
68. These are included in Item 2, par. 66 above (Transport, etc.) The whole of this works out at 1.7 per cent. on output. No com- ment on this item is offered, but it may be said that the accounts reviewed cover a production embracing all classes of goods from the best to the cheapest and that this is probably a reasonably representative figure for the whole of the industry.
MARKETING METHODS.
69. The Japanese market their goods, for export, either:
(1) Direct to Chinese importers and dealers who buy both in Japan (Osaka mostly) and in China, from the Mills, or from Japanese export houses,
(2) Through Japanese import houses in China and Man- churia.
(3) To a small extent, through British export houses in Japan with-in some cases-their own import houses in China.
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