purchasetax

The Tax Man Cometh

1939 saw the outbreak of World War Two. One year on, and the British Government could not foretell a conclusion to the conflict. Someone was going to have to pay for the draining resources, so it was decided to introduce a levy on 'luxury goods", such as jewellery, china and other porcelain ornaments, fur coats, real silk, lace, cosmetics, etc. Phonographic records would also be included. The scheme was termed as a ‘wartime impost’ with the idea that this inflation would dissuade the public from purchasing such, thus the raw materials could be diverted for use in the factories where war related items were being manufactured, and in turn move the labour force to same. One wonders the importance of silk, lace, and cosmetics. Would these be in reserve for the Members Of Parliament in case of capture, so they could put on a jolly good ~~Drag~~ Gang Show?

When the government introduced the proposal of the new Purchase Tax scheme, members of the House Of Commons protested that books and publications were, on the whole, educational, and not a ‘luxury’. Under duress, the then Chancellor of the Exchequer, Sir Kingsley Wood, abolished the idea of taxing books, etc. Being that Sir Kingsley would be saving a considerable sum on his own law books had no influence on this final decision!

House Of Common's Sense

What was deemed as, and as not a luxury, was the bone of contention for many a year to come. In fact, it was to become somewhat farcical rather than a question of doubt. The government set themselves up in an embarrassing scenario by deciding to leverage varying percentages of Purchase Tax, deemed on what they would decide was more important to the good of the country.

Example: 1959. Set aside the ongoing questions in the House on levying Purchase Tax in the first place on gramophone records (more on this later), how about the fact an LP Record Carrying Case, that is one that included covers for the discs and /or Index Cards, carried the same amount of Tax as a record (50%), yet a carrying case of similar design but without the enclosed aforementioned had the rate of 25%. Furthermore, the then trendy freestanding Record Rack also carried a 50% duty, whereas wooden cabinets that housed records had just 5% Tax slapped on them, as were termed as furniture! And we know that all types of furniture are a necessity!

If you find this bizarre, a Wireless (Radio if you prefer) had a combination of two rates of Tax. That is, the 5% being for the cabinet (yes, furniture of course!), and the internal workings at 50% - which was double the rate for electrical instruments, including amplifiers.. err.

Okay, so Gramophone Records were supposed to be a luxury, but by 1960 there were now a wealth of Spoken Word on the market, including instructional, the works of William Shakespeare, the arts, and the suchlike. Akin to a book, and of great benefit to the shortsighted and blind, you would be forgiven to assume that these were deemed as educational, thus be exempt from Tax. Wrong! These points were raised in the House on more than one occasion, but the Government dug their heels in. After all, it was for them “a difficult problem”.

Pop records were bordering on ‘trashy’ by the old lags in the House. The fact that one could decide the outcome of a piece of wood by it’s contents, it would not have been rocket science to come up with a coded numbering system for Records that were of importance in the well-being of the public. Basically, it is the same adage as applies since the conception of taxes. That is, if the people pay without too much resistance, why reduce or abolish?

High Rate - or Irate?

Purchase Tax came into ~~farce~~ force in October 1940, commencing at the rate of 1/3rd (331/3%). This was added onto the wholesale price, which, obviously was passed on to the consumer via the retail price.

In April 1942 the government upped the ante from 33/1/3% to 662/3% - double! And if that was not bad enough, exactly one year later it shot up to 100%, and did not change again until exactly 3 years later, 1946, whereupon it reverted to 331/3%, which by contrast, now appeared to be a good deal!

To make a similar comparison so as to get the gist of this:
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1943. An HMV 78rpm with a label catalogue index of DA or DR now retailed at 6s 71/2d incl. Tax. Take the ‘average’ weekly wage then as £3. If one earned £3 4s, six records could be purchased, bearing in mind these are effectively 10” singles. Long Playing records (LPs) were not launched onto the market until 1948, although the first release of such in the United Kingdom was 1950.

May 2008. Take an average wage of £265, which, at 40 hours, is above the guaranteed minimum. Divide this by six. Equates to around £44 per record!
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Yes, it is difficult to compare like-for-like. Just look at those 1960s advertisements for refrigerators and 3-channel b&w reception televisions, do the figures and you would wonder how anybody ever afforded anything at all. But even if you make room for adjustment, it is a wonder how any amount of records was sold during the war. Now, 78rpm discs from this period are on the whole disregarded – and worst of all, discarded!

From the 331/3% rate in 1946 as previously mentioned, to the Value Added Tax system introduced in April 1973, there were many more Purchase Tax rate adjustments up and down so as to keep everyone on their toes. This I will include here at a later date ( i.e. to follow!).

Purchase Tax Codes

At the introduction of the Purchase Tax scheme in October 1940, taxable goods, including records, that had already been manufactured and distributed, would have a sticker adhered by the retailer stating ‘Free Of Purchase Tax’.

From this date, EMI, DECCA, and PHILIPS Record Companies used a Purchase Tax code, commencing with just one letter – ‘T’.

Records held at wholesalers and at the record manufacturers plants would have a sticker adhered to the label, in the form of letter ‘T’. This would also be the code initiated on records manufactured as from December 1940. The letter was located adjacent to spindle’s hole, and embossed on the shellac so that it protrudes through the paper label. This embossed letter was termed at the factory as a ‘slug’ (aficionados have just learned something new!). The utilized tax code letter was also stamped within the needle’s run-off area, If you own records on the Brunswick, Decca and Rex labels from this period, one should be able to observe the printed word ‘Tax’.

The record companies allocated retailers an amount of records that could be returned if so desired. However, this, in many cases, could be as low as 5% of the order. But there arose the problem as to the rate of Purchase Tax on any disc returning. After all, what shopkeeper would want to knowingly make a profit on the government’s tax?? If a record had been ordered at the 331/3% tax rate, and now the levy was 50%, what to do? How could one keep track? - (pun intended).

Each time the government changed the rate of tax, either up or down, a new letter was utilized, but always retaining the initial ‘T’. As previously set out, every time this occurred, the existing stocks had to be re-coded using the applicable lettered self-adhesive stamp.

If you can't lick 'em, beat the system?

Record wholesalers were given the applicable new coded stamp. The rule was that this had to be adhered onto the label, preferably top right, but in now way obscuring any copyright on the label. Thus, one could now distinguish the stock’s Purchase Tax rate – assuming the stamps had been applied! Yes, there are EPs and LPs to be found with these stamps adhered to their covers, and not the labels, but this was not the correct procedure, and technically these were not eligible as ‘returns’. If the wholesaler had the arduous task of updating the Tax Code on large quantities, life was a lot easier to slap them onto the record's jacket! Some retailers did receive the loose Stamps, but this was actually 'Illegal', as the temptation would be at hand to apply these or not, depending on the direction the the Purchase Tax adjustment, thus make a 'extra profit' on sales plus any returns!

Consequently, all two letter self-adhesive stamps from 1942 onwards pertain to Purchase Tax, and are not to be confused with 'Royalty' stamps. These can be found on records issued between 1912 and 1940 in the UK (other countries may vary slightly), and signify that Mechanical Copyright and Music Publishing Royalties have been paid. From 1940 onwards, all necessary copyright statements were included within the label's typeface. Oh, and the bland square stamps adhered to record labels with just a number on them - these are the original owner's reference number. The stickers, along with a filing card, were included with a record case or similar.

Regarding the code change at the factory, if the Mother Stamper had already being manufactured, then an x was to obliterate the old letter, and the revised one underneath this. However, you will find that companies did not always follow through with this rule, thus it can be observed 3 tax code letters impressed within the run-off, and also sometimes similar embossed around the centre hole. EMI records are a prime example of this! Letters that were employed will be listed here soon. But for now, for the period of interest to most, here are the details:

From	Begins
10 April 1962..................	ZT
26 November 1962..........	PT
1 January 1963..............	MT
1 July 1963...................	KT
1 January 1969 on.........	None