Thursday,
.HONGKONG TELEGRAPH
February 20, 1941.
More; Supreme
5
DEBATE ON HONGKONG'S BUDGET FOR THE 1941-42 FINANCIAL YEAR
MR LO CRITICISES WAR TAXATION. FOOD CONTROL AND IMMIGRATION
The Hon. Mr M. K. Lo, dealing at length with the budget speech, expressed appreciation of the granting of financial aid to charitable and medical relief to China, and then went on to make an exhaustive study of the war taxation returns, con- cluding with a criticism of the administration of the Ordinance. He also expressed regret that it was proposed to increase death duties.
Mr Lo also deprecated the manner in which the work of Food Controller had been performed and insisted that one of the chief qualifications for this office was some commercial knowledge and experience; he argued that the Food Controller lucked this commercial experience.
The speaker expressed the Chinese community's dissatisfaction over the way Government had handled the important question of importing firewood Into the Colony, and later made criti-. cisms of the manner in' which the administrative machinery of the Immigration Department had been operated,
The text of Mr Lo's speech¡cterise all his offelal actions, have Corporation Profits Tax) follows.
Your Excellency: 1 have very little to say on the Budget now be fore this Counell, which represents the result of the deliberations of the Select Committee to which the Draft Estimates
were referred.
taina
won their united confidence, admira- Business tion und respect.
Salaries Tax Now, lo return to the Honourable | Property Tax the Financial Secrclary's observa- tons.
the
pre-
The ilonourable the Financial Secretary, in his Budget speech on 11 is a matter for regret that eer-January 16, 1041, quoted some desirable itens have had to be remarks he had made when he in- deleted from the Draft Estimates. troduced the War Revenue Bill in But, in view of the budgetary post this Council in March of
These remarks 1 can tion and the uncertainty of the im- ceding year. mediale economile position, the Un-only describe es dancing the olleials have deemed such exclusions)ance with faint praise. He procéd
tre To say that Government feit "in" wase in the circumstances.
I personally regret that, owing to view of the change in the financlat the general Gnancial situation, the position and the situation disclosed lont-promised rebuilding of Queen's by the actual receipts from the four
War Taxes that the principles College has once more to be ferred.
which the laxation was based should colleagues and i recently made Le reconsidered."
tutions to Government as 10)
sures
and I
der
Descrved Gracious
Acknowledgmont
ON
ag
General
$ 3,000,000
$ 1,000,000
$ 2,000,000
0,000,000
to
which
inent.
ances.
HION, MI S. H. DODWELL
Serious Criticisin
HON, MR J. J. PATERSON
It should be well known to Gov- ernment that family inheritance has always constituted a very important part of Chinese family life, and I do submit that excessive rates of levy. undue delay in obtaining!
administration
of the Estate Duty Ordinance, ull constitute great incentive to evasion. the Unofficial Members of this Sir, the
as the Chinese Mem-
Food Control
words on the question of Food Con- To begin with I wish to say a few
trol.
spine com-
The
Fecord
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In comparing this with the estim- ate of $10,000,000 from a full income tax It should be remembered that
(a) Income subject
United Kingdom Income Tax is almost fairly over the community. It may well be that, in order to produce entirely exempted under the new Bill. Several important companies ore revenue, some alterations will have to be male in the Ordinance. are thus outside Its scope alto-As 1 do not wish to anticipate in any gether. (b) Profits tax will be applied way the findings of the Committee Your Excellency has recon- only to profits made in Bonnkont, Actituted I abstain from further com- sentation, and harch tegal repre- whereas Income tax would have applied le all profits of resident persoas, including companies re- gistered here, wherever made.
I regret that I now come to a point Council, as well (e) Other income from abroad
of serious criticism against thebers of Councils, have had occasion Now, what are the facts? After
will not be taxed at all under the administration of the War Revenue to make various representations to the imperative neecasity of budget-one of the bittbrest controversies
new Bill.
Ordinance. In the Report of Mr Government on certain aspects of ting for a substantial amount in the which the Colony has ever known, It was, however, repeatedly em-Caine, to which I have referred, he Government Administration during then coming Estimates, to be alluent the Bill was introduced to this Coun-phasized by the official representa-made it quite plain that "Partner the past year. Pending their finai ed entirety to anti-tuberculosis mea-cil on March 14, 1940 with the lives on the Committee that Govern-ships will be assessed as a whole and outcome 1 feel it my duty to make a sures and equipment. We felt unanimous general approval of this ment was not seeking to raise any no enquiry whatever will be neces-few general observations. strongly that much of the already Council. The statements published particular sum of money but to heavy, though necessary, expenditure from time to time in the Press as impose a reasonable burden of taxa-ry into the division of pronts be- tween partners." The Honourable on the medical side would not be of having been made by the War Re-tion and we consider that the rates the Financial Secretary himself, in much avail if the problem of tuber- venue Department that the levying of of tax proposed do impose stick a introducing this Bill in March 1910, culosis, entailing such widespread the taxes was proceeding smoothly reasonable burden."
liness, distress and mortality, were would appear to point to the gratify-
We therefore recommend that she third and fourth taxes are to be left untouched. Government ing fact that the hope expressed by Government should proceed with respectively a corporation profits tax obviously one of very great difficulty. The task at a Food Controller is has replied to the effect that it has the War Revenue Committee, and incasures on the lines of the attached been decided to defer a decision on re-echoed in this Council, that there Bill. If the revenue obtained is in- and a business profits tux on and due allowance must be made for
be profits made in the Colony this matter until the return to the should be no attempt at evasion in adequate consideration should
to be done in hurry. I submit that Colony of Sir Gebury Northcote, 1; view of the purpose for which the given to the adoption of some or all/ which is levied on the business and the fact that many things would have hope that before lung something will proceeds of the taxes were to
be of the items referred to at the begin. I not on individual persons so that no the indispensable qualification of
to the ownership of the Food Controller must be
uny enquiry as be done in this regard.
used Ins been fulfilled.
ning of paragraph 4,
business and the division of the pro-mercial knowledge and experience, must say i om glad Government
In Although the yield under this Or-
prepared by Mr Caine nis is involved. There is, in it note has budgetted $150,000 for the estab-dinance was originally estimated
on "Principal differences between circumstances, no deduction in re- theory of economics mnti conscientious the and, however well qualined in the lishment
of an experimental agricul- be six million, the revised estimated the War Revenue Bill and the 'Inspect of personal and family allow in the discharge of his duties, the pre- tural station in the New Territories, yield is nearly ten taillion (which, come Tax Bill" he states:-
sent Food Controller hus had no I hope that the result of the ex- Incidentally, is the amount of the
In spite of the history of this mat- commercial experience. An Income Tax seeks to tax everyter, and of the official declarations to of his administration has not inspired periment to be made in regard to estimated yield for the full Income the disposal of night-soil in the New Tax Bill), and this in spite of the source of each individual's income which I have referred, I am sorry to confidence that it
an emergency all Territories, for which $60,000 has fact that it is universally accepted and to make allowances for his have to state openly in this Council will be well as regards the question been budgetted, will prove satisfac- that the yield of a tux of this kind family responsibilities and other in-that examiners have sought to get of foot supply, and I record in this
circumstances. Jury
observe that the actual revenue during the first few years.
cat never be brought to full fruitior dividual
Although Chinese firms to disclose the names Counc my grave doubt as to his much may be collected at the source of the partners constituting the arms. ability in turning over certain re- fur 19:18 exceeded the estimated re-
it is ultimately an individual tax and I should have thought it
impossible
serve food stocks--though the
quần- venue by nearly 615 milion: that the
nay entail much enquiry into per-that any Government official actual revenue for 193b exceeded the
sonal
titics purchased are infinitesimal to would affairs. estimated revenue by over 54% mit-
The new Bill proposes to take each Proceed counter to one of the funda- the quantities originally proposed mental bases of the taxation, and I without very serious losses arising. lion and that the revised
ised estimate
Personally I should have thought of the main classes of income separ- look to the Honourable the Finan- We know that the Food Controller of revenue for 15 months in respect that such an unexpected and gratify-ately and tax them at rates adjusted einl Secretary, as the Commissioner has now delegated his powers in re of 1040/41 exceeded the original ing result of a measure which had only approximately to capacity to estimate by over 16 million. I can received such striking unanimity of y
At some sucrifice of the fee under the War Revenue Ordinance, gard to rice to a business man more
to see to it that his subordinate ofi-conversant with the subject. revenue may happily prove to errpport in this Council would have ments of an income tax It thus avoids eers do carry out only. hope that the current estimated
completely the merited an acknowledgment from many problems which arise in the spirit of the framers of the legisla in the sune direction for the current Government more gracious and fit-pinistration of these refinements on, in accordance with the solemin year, so that funds may be availting than the strictures which the and removes some of the features of declarations of Government. abhi-for-to-many-important projects Honourable-the-Fimmeial-Secretary income tax which_are_objectionable and social services.
Telt bound once more to pass on it. to the public."
Death Duties the Budget Debate held 05 The Honourable the Financial
The Honourable the Financial November 9,
mber 9, 1939 I renewed, for the Secretary observed that fur
Without Misgivings
Secretary has intimated that Gov-nile steps for the Importation of firewood into the Colony. The third successive year, a plea that front him "o seek to resuscitate กุ Such, Sir, were the views of Mr ernment proposes to increase the Chinese Members of Councils had Government might be kind enough to
Death Duties. appreciate that
toke such make a substantial grant for provid-unico,ersy which
I am entirely with him in he was in favour of a straight income Honourable Members will have an step even before His Excellency Sir
ed Government to ing charitable and medical relief to this attitude. But may I remind tax measure. But he himself was opportunity of discussing this ques- Geoffry Northcote left the Colony on the Chinese on necount of the Sino- Honourable Members of certain facts the author of the Ordinance now in tion when the necessary amending leave. On August 3, 1940 a memo- Japanese conflict. I
Indeed um
and circumstances in regard to the force, and he put it forth as a com- Bill is before this Council. But in randum on this question was sent in happy that the Select Committee, introduction of the War Revenue promise measure without any trace the meantime I wish to make a few to Government, wherein It was urged with the unanimous approval of the Ordinance?
of reluctance, and certainly without general
that Government should requisition Unofficial Members, has agreed
eral observations. any misgivings as to
The Report of the Texation Com- steamers for the purpose of importing mittee published as Sessional Paper firewood into Hongkong. I feel that The Honourable the Financial No. (1939) contained the following the Chinese community has every Secretary said: "Although the War observation on the question of Death reason to be dissatisfied with Gov- "I enclose some 'suggestions' for a Revenue Ordinance has secured con- Duties:
ernment's inactivity, over such a draft report of the Income Tax Com-siderably more revenue on was on- "Any further revenue under this lengthy period, in relieving the acuic to secure head should be obtained by an in- shortage of firewood, which has mittee. I am not circulating them tefpated has fulied
Head Office & Works 57032 as an omefill Committee document enough to meet the revised war ex-crease in the rates of Estate Duty caused so much hardship to the com-
Gloucester Bldg., 2nd Flr, Tel. 26030 Hong Kong Depot, because they represent what I hope penditure eliker in the current year rather than by the introduction of munity, especially the poor.
Tel. 58045 Peak Depot, other methods of taxing property on
has Kowloon Depot, which Another maiter, Sir, the Committee will be prepared to or in 1841/42." agree to rather than what has so far Pausing here I should like to point death, ef. Legacy or Succession given rise to grave dissatisfaction, is been agreed. In view, however, of out that the position he now lakes Dulics; but we consider the present the administration of the Immigration my approaching departure I thought up is fundamentally opposite to that rates, which were fairly recently in Ordinance. When I spoke in this it might be helpful to put my own taken up by Government hitherlo. creased to a maximum of 20%, high Council on the Second Reading of the As I pointed out in this Council on enough in the circumstances of long-B I thought that the effect of this Atarch 14; 1940, His Excellency where the much higher rates measure on the Colony depended very
how it would be ad Sir Geoffry Northcote, in his
speech
evalling
Cg the United King-largely on how it Let me, then, quote from certain made it determine to raise, a
in this Council on November 10, 1939, dom, would add greatly to the in-tered by the Immigration Officer, and
clear that Government | centive of evasion."
I then stated that my colleagues and relevant paragraphs of his report: did not
I intended to malatala That report was dated April 5, awar
a close Inter- "તુ We examined a great many budget revenue in any pre-determin- 1930, and I am not aware of circum- est in the operation of this measure, suggestions We rejected, either ed sum: in other words, the Govern- stances which have arisen between and that we should have no hesita- unanimously
by substantial ment's attitude was that as regards then and now which render that de- tion in making to Government any majorities, by far the greater num-war expenditure, that expenditure liberate expressions of view no longer representations which we might con-
of these proposals because was to be limited to the sum obtain- | sound.
sider it our duty so to do.
Cannot Acquiesce
put in, under Head 5 Charitable Ser-
be It
Is dead and Caine. He had made it plain that
vices, a donation of $10,000 to the addressed a letter to each member inequity in its incldere being any|
to
of
On December 4, 1939 Mr Caine
Не the Committee, In which stated:---
British Fund for the Relief of Dis tress in China, Hongkong and South
HON, MR M. K. LO
China Branch. I feel sure. Sir, that
ideas on paper."
"
Extracts Quoted
irs,
either did not full the conditions able by the War Revenue Ordinance, As to how far evasion of death
Firewood
I come now to the question of Firewood.
I understand that Gövernment has at long last taken, or is taking, de-
adminis
r
to
Besty, on suiaries and analogous in- and business tax should bring in present holder of the ofice of Supertration of a mer comes and on business profis made $6,400,000, as against $3,000,000 anti- intendent pt Inland Revenue and people to wait for long hours outside
the
Not Surprised
and
and vision, whole Istrative machinery there have been)
laid down by our terms of reference and not that the Colony had to find a duties exists I do not feel competent or would ylek! revenue too small to specified
to spent. But of this I am quite amount.
I know that the Immigration OM- Justify their imposition.
The Financial Secretary points out certai It evasion could be pre- ver has not spared. himself in the dis- The best alternative means that according to the revised estim- vented by zeal and vigilance. It charge of his very difficult duties. of imposing taxation of approximate ate, salary tax will bring in $1,000,- would have been effectively stopped But I do say that whatever may be ly the same incidence as the proposed 000 as was anticipated: property tax by now, because I can imagine no the explanation, the Chinese com- Income Tax appeared lo be a com-
cannot be om- $2,300,000 ns bination of taxes assessed on pro- was anticipate. Whilst porn on one possessing greater zeal and minity
corporation exerc wh
exercising prenter vigilance, then the
adminis- acquiesce in the continued
measure
ure which compels this gesture will be very much appres in the Colony on bases and at rates elpated. But he adds, as regards the Estate Duty Commissioner, for whom, the Immigration Offee, herded to- clated by the Chinese, and my col- calentinters to impose very broadly fatter item: "This figure includes if he will allow me to say so, I hold gether leagues and I tender our
like cattle, In order to get a sincere the same degree of merince on the no less than $5,500,000 in respect of a
a high thanks to Your Excellency,
regard. Indeed, I go further permil or p get back a deposit. several cinases of
of persons
affected.
corporation profits and only $900,000 say that it
It is the deliberate view Apart from the question of admin- War Revenue
Stach a
a combination of taxes would in respect of business profits, which of the legal profession Sir, in the extremely
a partial income tax,
that the zeal |is disappointingly small. able
exhibited numerous complaints of sheer rude- and lucld speech of my Honourable
much the greater part of
by this conscientious officer haveness and offensive, conduct on the part friend the Financial Secretary, in in-
income which would be liable
Бесп БО
execesive in many cases as of the officers of the Department. troducing the Budget, there were cer many compilentions owing to its be
to a full income tax but freed of
to occasion unjustifiable delay, incon Civil Servants should be elvil ter- observations
Sir, this is the whole case for survenience and expense to bona fide vants' tain
may be a familiar the War Reing partial in scope and
witticism, venue Ordhaned with which I must ximately
rogesting that the principles on which applicants for Jegal representation, but only appro
suggest that adjusted denl. But, before doing so, may a
to Individual foxation is based should be recon-
wholesome admonition to which Civil Wide Powers
Servants in Hongkong should pay Buy how much Impressed I have been ability to pay. In particular much sidered. I can see no ground for sur by the way in which he has carried stances which is apprehended from should yield
of the enquiry into personal circum-prise that the business profits inx The powers conferred on the serious head. A most unfavourable as against the unex-vestigating every estate are neces- un visitors to the Colony. And I do pectedly larger
larger yield of corporation sarily wide. But I suggest that in seriously appeal to offers of the I- profits. Mr Caine never attempted wielding such great powers regard migration Department to remember that they are being paid by local tax- anything more than a guess of the should be had to the prosenca or combined
yield of the corporation absence of grounds for suspicion of payers to perform their duties and not 6. It is it anything more dim-and business profits tax, and candour with which he has al-cult to assess the probable annunt simple reason, that thera
the evasion of duty, and that under to show off their own Importance. were no normal ́circumstances the Estate Sir, I do say deliberately that ways treated the Unofficial Members yield of those taxes then that of an accurate data available. Nor can 1 Duty Commissioner should not at either the administration of the Im of the Council on the courage, income tax, but the estimate of Mr see how the yield of the taxes as tempt to reopen and resuscitate mat migration measure is radically in- financial S. Caine, then Financial Secretary, above indicated can afford any outers, adjudicated upen a long Ume prove and I submit that it can, and Interests of the Colóny, which char- was as follows
dence that the incidence is not spread | ago.
Continue on Page 7
on
“
↓
anbodies a
out is onerous duties as Financial, the administration of income tax, one million thing just under Estate Duty Commissioner for in-impression has already been created
Secretary during the dimcult and should be avoided." turbulent times through which the
·lias
of hie distinguished
I venture to say that the
ro of passed since no
this and
Mr Caine's Estimato
for
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