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PUBLIC FINANCES
bring it up-to-date. Rates are due quarterly in advance and demand notes are issued by the Accountant General and are payable at the Treasury. There is provision for a surcharge on any rates in arrears. Revenue from rates has about doubled over the last five years and nearly trebled over the last eight years. The estimate for 1963-4 is $141,050,000.
There are few exemptions. Premises used for educational, charitable and welfare purposes are rated, but most of the bodies running these establishments receive back the amount of rates paid in the form either of direct subventions or contributions toward
rates.
INTERNAL REVENUE____
Tax on Earnings and Profits. Income was first subjected to direct taxation in Hong Kong in 1940 with the introduction of the War Revenue Ordinance. This act was a temporary measure for the purpose of raising funds by way of tax on income to assist His Majesty's Government in the prosecution of the war'. The stated object of the imposition disappeared in 1945 and no attempt was made to collect tax after the liberation of the Colony, although the ordinance was not repealed until 1947.
The calls upon the Colony's finances were such that in 1947 a new source of revenue was essential and it was decided to impose a direct tax on incomes as a permanent measure. The Inland Revenue Ordinance, 1947, followed the principle of the old War Revenue Ordinance in charging tax only on income or profits arising in or derived from the Colony. No tax is charged on income or profits arising outside the Colony whether remitted here or not. The ordinance aims at simplicity and to this end charges tax generally at source and at a flat rate rather than in the hands of the eventual recipient on a sliding scale. By so doing the necessity of ascertaining the total income of each individual is avoided.
Incomes and profits are grouped in four categories, each of which is subject to a separate tax, namely, Property Tax, Salaries Tax, Profits Tax and Interest Tax. A fifth and aggregate tax known as Personal Assessment is chargeable upon persons who so elect. The effect of election is that the individual's income other- wise chargeable to the four separate taxes is aggregated in a single sum which is reduced by personal allowances and charged