Thursday,
HONGKONG TELEGRAPH
February 20, 1941, Grace: Supresre Court,"
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. had been operated.
The text of Mr Lo's speech follows.
Your Excellency: I have very Hulle to say on the Budget now be fore this Council, which represents the result of the deliberations of the Select Committee to which the Draft Estimates were referred.
regret that cer-
only describe.es damning the Ordin particular sum of money but to ance with faint praise. He proceed-impose a reasonable burden of taxa- ed to say that Government felt in tion and we consider that the rates view of the change in the financial of tax proposed do impose such a position and the situation disclosed reasonable burden." by the actual receipts from the four 8. We therefors recommend that War Taxes that the principles on Government should proceed with which the taxation, was based should ensures on the lines of the attached be reconsidered."
B. If the revenue obtained is in-
Now, what, are. the facts? After adequate consideration should be or all begin-
it is a matter for ve had to be one of the bitterent controversies tiven to the nation of some
tain desirable items deleted from the Draft Estimates, which the Colony has ever known, of the items referred to at the
But, in view of the budgetary post- the Bill was introduced to this Counning of paragraph 1 Mr Coine
with the In a note prepared tion and the uncertainty of the imeit on March 14, 1940 mediate economic position, the Un- unanimous general approval of this on "Principal differences between ofcials have deemed such exclusions Council. The statements published the War Revenue Bill' and the 'In-
from time to time in the Press as come Tax Bill" he states:- wise in the circumstances,
Ro-
"1. General. personally regret that, owing to having been made by the War long-promised rebuilding of Queen's the taxes was proceeding College hus once more ty be de- would appear to point to ferred.
O! An Income Tax seeks to tax every
the general Onancial situation, the venue Department that the Source of each individual's income
sures
and
and to make allowances for N circumstances. Although
HON. MR S. II, NODWELL
HION; MR J. J. PATERSON
heavy, though nece would not be of yield is nearly ten million (which, pay. At sorne sacrifice of the reine under the War Revenu
expenditure be six million, the revised estimated only approximately to capacity to/rint Secretary, as the Con COMversant with the subject,
to be
from
Loversy
The
that
Firewood
I come now to the question of Firewood.
of relleving the acute?
which hos
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to the ing fact that the hope expressed by family responsibilities and other in-that examiners have sought to get My colleagues and I recently made the War Revenue Committee, and divkiual epresentations to Government us to re-cchord in this Council, that there much may be collected at the source Chinese firms to disclose the numes serve food stocks-though the quan- ultimately an individual tax and of the partners constituting the firms.lities purchased are infinitesimal to should have thought it impossible the quantities originally proposed- the imperative necessity of budget-should be no attempt at evnsion its it
substratul anunt in the view of the purpose for which the may entail much enquiry into per-that any Government ofletul would without very serious losses arising ting for
to be tonal affairs.
of the funda- We know that the Food Controller then coming Estimates, to be allocat-proceeds of the taxes were
The new Bill proposes to take each proceed counter to one ed entirely to anti-tuberculosis mca-used, has been fullled.
equipment.
Although the yield under this Or- of the main classes of income sepur- mental bases of the taxation, and I has now delegated his powers in re- We felt strongly that much of the already dinance was originally estimated to ately and tax them at rates adjusted look to the lionourable the Finan-gard to rice in a business ban there on the medical side
of the menta of an income tax it thus avoids to see to it that his subordinate ofl- much avail if the problem of tuber-incidentally, is the amount culosis,
Solailing such widespread estimated yield for the full Income many problems which arise in the cers do carry out completely the illness, distress and mortality, were Tax Bill), and this in spite of the administration of those refinements spirit of the framers of the legisla
I understand that Government has left untouched. Government fnet that it is universally accepted and removes some of the features of tion, in accordance with the salemin
at long lost taken, or is taking, de- has replied the effect that it has
to
has that the yield of a tax of this kind income tax which are objectionable declarations of Government.
Death Duties
finite steps for the importation of been decided to defer a deciston on can never be brought to full fruition to the public."
firewood into the Colony. The this matter until the return to the during the first few years.
the Without Misgivings
Honourable
Financial Chinese Members of Councils had Personally I should have thought
Secretary has intimated that Gov- urged Government to take Colony of Sir Geoffry Northcote. I
such Such, Sir, were the views of Mr ernment proposes to increase the an hope that before long something will that such an unexpected and gratify
step even before His Excellency Sir done in this
ing result of a measure which had Caine. He had made it plain that
Duties, 1 Death regard,
appreciate
Geoftry Northcole left the Colony on I must my I am
glad Government received such striking unanimity of he was in favour of a straight income Honourable Members will have an leave. On August 1, 1940 a nemo- has budgetted $150,000 for the estab-support in this Council would have tax measure. But he himself
was appertunity of discussing this ques-randum on this question was sent in Ishment of an experimental agricul-merited an acknowledgment from the author of the Ordinance now in tion when the necessary amending to Government, wherein
it was urged ural station in the New Territories, Government more gracious and t-free, and he put it forth as a com- Bill is before this Council. But in that Government should requisition and I hope that the result of the ex-ting than the strictures which the promise measure without any trace the meantime I wish to make a few steamers for the purpose of importing periment to be made in regard to Honourvible the Financial Secretary of reluctance, and certainly without
general observations,
Brewned Into Hongkong. I feel that the disposal of night-soll in the New felt bound once more to pass on It. any misgivings as to there being any The Report of the Taxation Com the Chinese community has every Territories, for which $60,000. has Tire Honourable the Financial inequity in its incidence.
mitice published as Sessional Paper reason to be dissatisfied with Gov- been budgetted, will prove satisfac-
observed that for be ht The Honourable the Financial No. 2 (1939) contained the following cramen
ernment's inactivity. over such a tory,
to seek
seek to resuscitate a Secretary sukl: "Although the War observation on the question of Death lengthy period, in observe that the actual revenue;
which
dead
and Revenue Ordinance has secured con-Duties:
shortage for 1938 exceeded the estimated re-
Am entirely with him in siderably inore revenite than was an- "Any further revenue under this caused so much hardship to the com- venue by nearly 61⁄2 million: that the this attitude. But may I remind ticipated it has failed to secure head should be obtained by an in-munity, especially the poor.
mother actual revenue for 1939 exceerted the Honourable Members of certain facts enough to meet the revised war ex-crease in the rates of Estate Duty
matter, Sir,
which has estimated revenue by over 5 mil-and circumstances in regard to the penditure either in the current year rather than by the Introduction of given rise to grave dissatisfaction, is lion: and that the revised estimate introduction of the War Revenue or in 1941/42."
other methods of taxing property on the administration of the Immigration of revenue for 15 months in respect Ordinance?
Pausing here I should like to point death, c. K. Legacy or
Succession Ordinance.
When
Then I spoke in this of 1040/41 exceeded the original Оть December 4, 1939. Mr Caine out that the position he now takes Duties; but we consider the present Council on Lie Second Reading of the estimate by over 16 million. I can addressed a letter to each member up is fundamentally opposite to that
hat rates, which were fairly recently In- Bill I thought that the effect of this only hope that the current estimated
ated for the Committer, In
which he taken up by over the Council on south in the circumstances of long-largely on how it would be adminis
Government hitherto,creased to a
to a maximum of 20%, high measure on the Colony,
depended
nded very revenue muy happily prove to errstated:
As 1 pointed out direction for the current
March 14, 1940, His Excellency kong, where the much higher rates tered by the Immigration Officer, and "I enclose some suggestions for а Year, so that funds may berayal draft report of the Income Tax Com-Sir Geous cloth November 16, 1959, prevalling in, e.. the United King- then stated that my colleagues and would add greatly to the In-I intended to maintain a close inter- and social services.”
eat in the operation of this measure, as an olleial Committee document made it quite clear that Government Budget Debate heki inlas
War That report was dated April 5, and that we should have no hesita November 9, 1939 I renewed, for the beruse they represent what I hope did not determine to raise
the Committee will be prepared to budget revenue in any pre-deterinin-
rinin 1039, and I am not aware of circum-tion in making to Government any third successive year, a plea that recto rather than what has so fared sum: in other words, the Govern- stances which have arisen between representations, which we might con- Government might he kind enough to been agreed. fn view, however, of meat's allitude was that as regards then and now which render that de-sider it our duty so to do. make s
& substantial grant for provid- my approaching departure I thought war, expenditure, that expenditure liberate expression of view no longer
Cannot Acquiesce charitable and
and medical relief to it aninht be helpful to put my own was to be limited to the sum obtain sound. the Chinese on account of the Sino- ideas on paper.
able by the War Revenue Ordinance, As to how far evasion of death Japanese
I know that the Immigration 001- conflict. 1
and not Unt the Colony had to find duties exists I do not feel competent cer has not spared himself in the dis- Indeed happy_that_the_Select Committee, 1
specified
Je speak. But_of_this_1__am_quite charge-of-la-very-dimcult duties. with the unanimous approval of the
The Financial Secretary pointy out Unomcial Members, has agreed to Let ne, then, quote from certain that according to the revised restin-orted by evasion could be pre-But I do say that whatever may be by zeal and vigilance, it the explanation, the Chinese com- nut in, under Head & Charitable Ser- relevant paragraphs of his report: ate, salary tax will bring in $1,000,- would have been effectively stopped
be expected We examined at great my ogu as was anticipated: procity tax by now, because I can imagine.no acquiesce in the continued adminis vices, a donation of $10,000 to the!
cannot munity British Fund for the Relief of Dis- suggestions We rejected, either $2,300,000 as against $2,000,000 #
substantial was anticipated:
one
possessing greater
of a measure which compels by tress in China, Hongkong and South unanimously
whilst corporation exercising greater vigilance, than the people to wait for long hours outside majorities, by far the greater num
business
should tax
bring in present holder of the office of Super- the Immigration
herded to- offee, bee of these proposals because they $4,400,000 as against $3,000,000 anti- intendent of Inland Revenue
งงอน either did not full the conditions cipated. But he adds, as regards the Estate Duty Commissioner, for whom, permit or to get t
and gether like cattle, in order to get
back a deposit. laid down by our terms of reference latter item: "This figure Includes if he will alle
allow me to say so, 1
•hold
Apart from the question of admin- or would yiehl revenue too small to not less than $5,500,000 in respect of a high regard. Indeed, further istrative machinery there have been
go justify their inposition.
corporation profits and only $800,000 and xy, that it is the deliberate view numerous complaints of sheer rude.
; 4. The best alternative incans in respect of business profits, which of the legal profession as a wholeness and offensive conduct on the part
imposing taxation of approximate is disappointingly sanall..
that the zeal
zeal and vigilance exhibited of the officers of this Department. by this
this conscientious officer have Civil
Servants should be civil ser- been so excessive in many cases ns vants' may be a familiar wittician, to occasion unjustifiable delny, Incon- but I suggest that embodies a Sir, this is the whole case for sud-venience and expense to perty, on salaries and analogous in-
to bona fide) wholesome admonition to which Civil and on business profits made Resting that the principles on which applicants for legal representation, comes
Servants in Hongkong should in the Colony on bases and at rates taxation is based should be recon-
powers conferred 00 the serious heed. A most unfavourable enlculated to impose very broadly sidered. I can see no ground for sur-
in
the
sume
able for so many important projects | milice. I am not circulating them in this Council on November 16, hive of evasion."
In
ing
the
HON. MR M. K. LO
ก
Extracts Quoted.
of
ly the same Incidence as the proposed
Income Tax appeared to be Con→ bination of taxes assessed on pro-
Not Surprised ·
The
to
pay
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the same degree of sacrifee on the prise that the business profits tax) tate Duty Commissioner for in-impression has already been created Kowloon Depot,
the income which would be liable yield of the corporallon
ernment
that
sarily wide. But suggest that In seriously appeal to officers of the Im Such a combination of Laxes would one million, as against or ratiwielding such great powers regard migration Department to remember
tax, pectedly larger yield of corporation should be had to the presence constitute Const
a partial income
or that they are being paid by local tax- covering much the greater part
Mr Caine never attempts absence of grounds for susplelon of payers to perform their duties and nat
more than a guess of the
that evasion of duty, and
under to show off their own importance. to a full income tax but freed of comb
normal circumstances the Estate Sir, I do say deliberately tax, for the Duty Commissioner should not at either the administration of the Im- many complications owing to its be-and business profits ing partial in scope and unly appro- simple reason that there
were no tempt to reopen and resuscitate mat- migration measure is radically im- ximately adjusted to Individual accurate data available. Nor can I ablity to pay. In particular much see how the yield of the taxes asters adjudlented upon a long time proved-and I submit that it can, and should, be improved-or that measure of the enquiry Into personal circum-above indicated can afford any evi- stances which is apprehended from lence that the incidence is not spread It should be well known to Gov-should be dropped altogether. the draintstration of income tax fairly over the community. It may always constituted a very important that family inheritance has well be that, in order to produce part of Chinese family life, and I do Chinn Branch, I feel sure, Sir, that should be avoided."
more revenue, some alterations will submit that excessive rates of levyistration of this Colony during
Sir, you have assumed the admin- this gesture will be very much appre
have to be made in the Ordinance.
undue delay in obtalning legal repre elated by the Chinese, and my col-
As I do not wish to anticipate in any sentation, and harsh administration Period which is one of the most leagues and I tender our sincere "d. It is if anything more diff-way the findings of the Committee of the Estate Duty Ordinance, all critical periods of the British Empire. cult to assess the probable annual which Your Excellency, has recon- constitute rent incentive to evasion. It is not surprising that the difficulty in the extremely able and yield of these taxes than that of an stituted I abstain from further com-
of the situation should have its re- Sir, the Unofficial
bers of this Members of Honourable
the Colony. The vel
Chi- income tax, but the estimate of Mr ment. friend the Financial Secretary, in in- S. Caine, then Financial Secretary,
the Chinese Mem-percussions on
nese. community gratefully appre- bers of Councils, have had occasion clates your concern and labour for troducing the
to make various representations to the well-being and security of the Government on certain
aspects of
thanks to Your Excellency.
specch
of my
Mr Caine's Estimate
tain olsedget, there were cer- was as follows:-
venue
"
on the War Re-Corporation Prost Tax) with which I must Business deal. But, before doing so, may I Salaries Tax
much impressed I have been. say how by the way in which he has carried Property Tax
out his onerous duties ས Financial
Secretary during the difficult and turbulent times through which the Colony has passed since the
ture of his distinguished prede
that say
the
I venture to
and candour with which he has al- ways treated the Unofficial Members of this Council, and
+
Serious Criticism
tpart
Council,
ns
ns
ગર
Tribute To H.E.
n
I regret that I now come to a point $ 3,000,000 of serious criticism
. $1,000,000 administration of the War Revenue the past year. Pending their final
War Revenue Government Administration during torony, os exemplified by your initia- In providing the population with $2,000,000 Ordinance. In the Report of Mr outcome 1 feel it my duty to make a of which you have taken such a keen alr ruld shelters, in the construction Calne, to which I have referred, he few teneral observations. $0,000,000 made it quite plain that "Partner-
personal interest. Since your arrival Food Control ships will be assessed as a whole and
in the Colony the Chinese Members
those
In comparing this with the estim- no enquiry whatever will be neces To begin with I wish to say a few of Counsells have had to make numer- ate of $10,000,000 from a full income sary into the division of profits bewords on the question of Food Corpus representations to Your Excel- tax it should be remembered that tween partners." The Honourable trol.
lency, and on their behalf, and also (a) Income subject
my own, I desire to tender to Your to United the Financial Secretory lilmself, in The task of a Food Controller is Excellency an expression of our deep Kingdom Income Tax In almost introducing this Dill in March 1940, obviously one of very great difculty, Exc entirely exempted under the new said:
and due allowance must be made for ratitude for the sympathetic manner the courage, |
Bill. Several important companies The third and fourth taxes are the fact that many things would have in which you have invariably received ability and devotion to the financial are thus outalde its scope allo respectively a corporation profits tax to be done in hurry. I submit that
representations, and your ever- interests of the Caleny, which char-
and a business profis tax on the
desire to give effect to them Indispensable
ready des of kny Qualification of gether, acterise all his offlelni actions, huva
Profits tax will be applied profis made in the Colony Food Controller must be som com as far as possible."
some com- won their united confidence, admira- only to prants made in Hongong, which is levied on the business and mercial knowledge
dre and experience, -May 1, Sir, also tender our thanks tion and respect.
whereas income tax would have not on, individual persons so that no and, however well qualified in the to the Hondurable the Colonial Secre aprilled to all profits of resident enquiry as to the ownership of the theory of economics and conscientious tury for the invariable courtesy which persons, including companies re-business and the division of the pro in the discharge of his duties, the pre-bers. My colleagues and I desire to he has shown to the Unofcini Mem- glstered here, whorever made, Alla involved. There is, in the sent Food Controller has had Do (e) Other Income from abroad circumstances, no deduction in re- commercial experience. The record pay warm tribute to him for the con- will not be taxed at all under the spect of personal and family allow of his ataninistration has not inspired spicuous ability which he has shown new Bill.
confidence that in an emergency all as Your Excellency's chief adviser, It was, however, repeatedly em- In spite of the history of this mat-will be well at regards the question which is such a well known charac- troduced the War Revenue Bill in phasized by the omelal representater, and of the official declarations to of food supply, and I record in this terlatie of our esteemed Colonial this Council in March of Uie pre-dives on the Committee that Gever-which I have refered, I am sorry to Council my grave doubt, as to his Secretary. ceding year. These remarks 1" ennment was not seeking to raise any have to state openly in Uils Councii obility In turning over certain ro-
Continued on Pago 6
Now, to return to the Honourable the Financial Secretary's observa- tlond
The
Honourable the Financini Secretary, In his Budget speech on January 10, 1041, quoted' 'some
remarks he had made when he in-
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