Thursday,
HONGKONG TELEGRAPH
February 20, 1941.
DEBATE ON HONGKONG'S BUDGET FOR THE 1941-42 · FINANCIAL YEAR
MR LO
CRITICISES WAR
.
TAXATION, FOOD CONTROL AND IMMIGRATION
Estimates were referred.
little
It is a matter for regret that cer-
be reconsidered.**
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.
of money but to The text of Mr Lo's speech only describe as damning the Ordin-particular sum
ance with faint praise. He proceed-impose a reasonable burden of taxa- follows.
to ed to say that Government felt "in tlon and we consider that the rates du impote stich a Sir!-I bave very before view of the change in the financial of tox proposed du Fly on the Budget now
"8. We therefore recommend that this Council, which represents the potion and the situation disclosed reasonable burden."
should proceed with result of the deliberations of the by the actual receipts from the four War Taxes that the principles on Select Committee to which the Draft which the taxation was based should measures on the lines of the attached 1. If the revenue obtained is in- Now, what are the foels? After adequate consideration should be given to the adoption of same.or all tan desirable items have had to be one of the bitterest controversies of the items referred to at the begin- deleted from the Draft Estimates. which the Colony has ever known, But, in view of the budgetary post- the Bill was introduced to this Counting of paragraph 4;
1040 with the In a note prepared by Mr Caine between "Principal differences tion and the uncertainty of the Im-ell on March 14, medlate economic position, the Un-unanimoun general approval of this on oficials have deemed such exclusions Connell. The statements published the War Revenue Bill' and the 'In- wise in the circumstances,
from time to time in the Press as come Tax Bir" he states:--
General. An Income I personally regret that, owing to having been made by the War Re- the general financial situation, the venue Department that the levying of
HON, MR E. HI, DODWELL long-promised rebuilding of Queen's the taxes was proceeding smoothly source of each individual's Income
would appear to point to the gratify-and College haя once more to be dearl that the hope expressed by family responsibilities and other in- i
dividual circumstances. Although that examiners have sought to get the War Revenue Committee, and divid My colleagues and I recently made zeechnet in this Council, that there much may be collected at the source Chinese firms to disclose the names serve food stocks-though the quan- quantities originally proposed-- representations to Government as to the imperative necessity of budget- should Be no attempt at evasion in it is ultimately an individual tax and of the partners constituting the firms. tities purchased are infinitesimal to
view of the purpose
for which the may entalt much enquiry into per- should have thought it impossible the
that any Government officini Besonal nifal
nifairs
We know that the Food Controller ting for a substantial sincunt in the
to proceeds of the taxes were then coming Estimates, to be
allocat-
bases of the taxation, and I has now delegated ha powers in r The new Bill proposes to take each ed entirely to anti-tuberculosis mea-used, has been fulfilled.
felt We Sures
equipment. and
ferred.
tory,
inst
Tax seeks to lax every
to make allowances for s
HON. MR J, J. PATERSON
Although the yivid under this Or- of the main classes of income separ-need counter to one of the would) without very serious losses arising.
The
this
uf
Financial inequity in its there being any.
the
secured con-
dead
The
Death
mittee
that
Firewood
I come now to the question of
of
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to clal Secretary, as the Commissioner conversant with the subject. strongly that much of the already disance was originally estimated to ately and tax them at rates adjusted look to the Honourable the Finan-gard to rice to a business mon more SPECIALISTS
expenditure be six million, the revised estimated only approximately to
the completely side would not be of girltd is nearly ten million (whics, pay. At some sacrifice of the refine under the War Revenue Ordinance. un the
the ments of an income tax it thus avoids to see to it that his subordinate off- much avail
vall if the
ber-incidentally, in the amount problem of tuber- culosis, entailing such widespread estimated yield for the full income any problems which arise in the cers do carry out
I understand that Government has ness, distress and mortality, were fact that it is universally accepted and removes some of the features of tion, in accordance with the solemn
were Tax B), and this in spite of the administration of those refinements spirit of the framers of the legisla-Firewood.
at long last talten, or is tatting, de- to be left touched. Government;
Buile steps for the importation Death Duties
into the Colony. Brewood has replied to the effect that it has that the yield of a tax of this kind income tax which are objectionable deciarations of Government. been decided to defer a décision onran never be brought to full fruition to the public."
Honourable the Financial Chinese Members of Councils had Without Misgivings this matter until the return to the during the first few years, Colony of Sir Geoffry Northcute. I Personally I should have thought
Such, Sir, were the views of Air Secretary has intimated that Guy urged Government to take such a hope that before long something will that such an unexpected and gratify-
appreciate Duties. I
Geoffry Northcote left the Colony on ing result of a messure which had Caine. He had made it plun that rent proposes to increase the step even before His Excellence Sir be done in this regard.
1940 a memo- On August 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, has budgetted $160,000 for the estab- support in this Council would have tax measure. But he himself was opportunity of discussing this ques randum on this question was sent in the necessary amending to Government, wherein it was urged an acknowledgment from the author of the Ordinance now intion when
But in that Govern
Government should requisition lishment of an experimental agricul-inerited
purpose of Importing tural station in the New Territories, Government more gracious and fit-force, and he put it forth as a com-
the promise measure without any trace Bill is before this Council.
observations general and I hope that the result of the ex-ting than the strictures which
Arewood into Hongkong. I feel that hns every periment to be made in regard tonourable the Financial Secretary of reluctance, and certainly without the meantime I wish to make a few steamers for the
The Report of the Taxation Com-the Chinese community the disposal of night-soil in the New felt bound once more to pass on it. ang misgivings as to
to be dissatisfied with Gov- tee published as Sessional Paper. reason Ilonourable the Territories, for which $60,000. bas
The
Honourable Financial No. 2 (1939) contained the following ernment's inactivity, over such a be observed that far Secretary
in relieving the acute engthy period, in been budgetted, will prove satisfac-
from him "to seek to resuscitate Secretary said: "Although the War pbservation on the question of Death
of firewood, which has Ordinance
Re Duties:- and is which
hardship the com- Tobserve that the actual revenue controversy
ABY
further revenue under this caused so much for 1038 exceeded the estimated retrititute. But may I remind ticipated it has failed to
in entirely with him in siderably more revenue than was an-
secure head should be obtained by an in-munity, especially the poor.
which hus Another matter, Sir, venue by nearly 6% million: that the onourable Members of certain facts enough to meet the revised war ex- in the rates of Estate Duty:
crease exceeded the actual revenue for 1930 estinated revenue by over 54 mi-and circumstances in regard to the penditure either in the current year rather than by the introduction of given rise to grave dissatisfaction, is
War Revenue or in 1941/42."
other methods of taxing property on the administration of the Immigration lion: and that the revised estimate introduction of the
Succession Ordinance. When I spoke in Pausing here I should like to point death,
Legacy or Su C.K of revenue for 15 months
1939 Mr Caine out that the position he now takes Duties; but we consider the present Council on the Second Rending of the
In-Bill I
I thought that the effect of this which were fairly recently In- hitherto. which he taken up by Government only hope that the current estimated of the Committee, in
As I pointed out in this Council en stated::-
11: 14, 1940, revenue may koppily prove to err
Excellency in the circumstances of Hong-largely on how it would be adminis
kang, where the much higher rates tered by the Immigration Omeer, and In the same direction for the current
" enclose some suggestions for a Bre
prevalling
in, eg, the United King- 1 then stated that my colleagues and year, so, that funds may be avail-
uis Council on November 16,
est in the operation of this measure, able for so many important projects and social services.
war That report was dated April 5, and that we should have no hesita- In the Budget Debale held November 9, 1939 I renewed, for the the Committee will be prepared to budget revente in any pre-determin-1939, and I am not aware of circum-tion in making to Govenment any mird successive year, a
plea that agree to inther than what has so far ed sun; in other words, the Govern- stances which have arisen between representations which we might con- Government might be kind enough to been agreed. In view, however, of ment's attitude was that as regards then and now which render that de-sider it our duty so to do. make a substantial grant for provide my approaching departure I thought war expenditure, that expenditure berate expression of view no longer ing charitable and medical relief to it might be helpful to put my own was to be limited to the sum obtain-sund.
able by the War Revenue Ordinance, As to how far evasion of death
I know that the Immigration Off- the Chinese on account of the Soideas on paper.”
and not that the Colony had to find a duties exists I do not feel competent eer has not spaced himself in the dis
duties. difficult quite 3m Japanese
ย speak. But of this I specified amount,
charge of his very The Financial Secretary points out certih, If evasion could be pre-But I do say that whatever may be
it Let me, then, quote-from-certain that according to the revised estim-vented by zeal and vigilance
the explanation, the Chinese com- be expected to cannot ...We examined a great many as was antleipated: property tax by now, hegause I can imagine no vices, a donation of $10,000 to the
We rejected, either $300,000 as against $2,000,000 ns one possessing greater zeal, and tration of a measure which compels British Fund for the Relief of Dis-suggestions
bg substantial was anticipated:
ted: whilst corporation
exercising greater vigilance, than the peopl
people
to walt for long hours outside tress in China, Hongkong and South Unanimously
majorities, by far the greater um and business tax should bring in present holder of the office of Super- the Immigration Office, herded 0- ber of these proposals because they $0.400,000 as against $3,000,000 anti-intendent of Inland Revenue and gether like cattle, in order to get n either did not fall the conditions cipated. But he adds, as regards the Estate Duty Commissioner, for whom, permit or to get back a deposit.
Apart from the question at admin- laid down by our terms of reference latter Item: "This figure includes if he will allow me to say so, I hold for would yield revenue too small to not less than $5,500,000 in respect of a high regard. Indeed, I go further istrative machinery there have been justify thele finposition.
corporation profils and only $900,000 and say that it is the deliberate view numerous complaints of sheer rude- 4. The best alternative means in respect of business profits, which of the legal profession as a wholeness and offensive conduct on the part of imposing taxation of approximate is disappointingly small,
in
Ordinance? respect
of 1940/41 exceeded the originat
On December 4,
this
estinate by over 10 million. I can addressert a letter to each member up is fundamentally opposite to that red to a maximum of 20%, high (mensure on the Colony depended very
on
conflict.
indred 45172
Select Committer.
happy that the
with the unanimous approval of the
Unofficial Members, has agreed to
draft report of the Income Tax Cum-) Sir GeoTry Northcote, in his 39.1 dam, would add greatly to the in-I intended to maintain a close inter-
mitter. I am not circulating them
an official Committee document made it quite clear that Government centive of evasion." cause they represent what I hope did not determine to raise
Extracts Quoted
Cannot Acquiesce
11967 671, under Head & Churitahir Ser- { relevant paragraphs of his reperti-fate, salary tax will bring in $1,000,-1 would have been effectively stone este in the continued adminis
Not Surprised
el
were
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that the zeal and vigilance exhibited of the officers of this Department. ly the sante incidence as the proposed
by this conscientious officer have Civil Servants should be civil ser Income Tax appeared to be a com-
been so excessive in many cases as vants' thay be a familine willleism, bination of taxes assessed on pre-
to occasion unjustifiable delay, incon- but I suggest that it embodies Sir, this is the whole case for survenience and expense to long ade wholesome admonition to which Civil
Head Office & Works 57032 perty, on salaries and analogous in-
Servants in Hongkong should pay comes and on business profits made gesting that the principles on which
applicants for legal representation,
"Thes
the serious heed. A most unfavourable Gloucester Bldg., 2nd Fir., Tel. 28038 Hong Kong Depot, "powers conferred
Tel. 66545 Penic Depot, in the Colony on bases and at rates taxation is based should be recon- calculated to impose very broadly sidered. I can see no ground for sur-Estate Duty Commissioner for in- impression has already been created Kowloon Depot, the same degree of sacriter on the prise that the business profits tax vestigating every estate are neces on visitors to the Colony. And I do
But I suggest nex-sarily wide,
that in seriously appeal to officers of the kn several classes of persons affected, should yield something just under
migration Department to remember Such combination of taxes would one million, as against the
local tax- tax,pectedly larger yield of corporation wielding such great powers regard that they are being paid by constitute partial income
should be had to the presence covering much the greater part of profits. Mr Calne never attempted absence of grounds for suspicion of payers to perform their dates and not
of the evasion of
and duty, that under to show off their own importance. the income which would be liable anything more than a guess
of the corporation evasi circumstances the normal
Estate Sir, I do say deliberately that to a full income tax but freed of combined
is beland business profits
for Lax, the Duty Commissioner should not at either the administration of the im many complications owing to Ing partial
scope and only appro- simple reason that there
tempt to reopen and resuscitate mat-migration measure is radically im- data available. Nor ximately adjusted 10 Individual accurate data
Clers adjudicated upon a long time proved-and I submit that it can, and should, be improved-or that measure ability to pay. In particular much see how the yield of the laxes as of the enquiry into personal circun above indicated enn afford any evit should be well known to Gov-should be dropped altogether. stances which is apprehended from dence that the Incidence is not spread ernment. that family inheritance has
Tribute To H.E. the administration of income tax fairly over the community. It may
Sir, His Excellency has assured well be that, in order to produce always constituted a very important should be avoided."
more revenue, some alterations will part of Chinese family life, and I do
submit that excessive rates of leyy, the administration of this Colony dur have to be made in the Ordinance undue delay in obtaining legal repre- ing a period which is one of the most As I do not wish to anticipate in any sentation, and harsh administration critical periods of the British Empire. sincere "0. It is if anything more dif-way the findings of the Committee of the Estate Duty Ordinance, all It is not surprising that the difficulty cult to assess the probable annual which Your Excellency has recon-constitute great incentive to evasion of the situation should have its re- Sir, in the extremely able and yield of these taxes than that of an stituted I abstain from further com- Sir, the Unofficial Members of this percussions on the Colony. The Chi- luck
of my Honourable income tax, but the cellmate of Mrment. speech of friend the
the Financial Secretary, In in- S. Caine, then Financial Secretory, troducing the Budget, there were cer- was as follows:- tain observations on the War
Far Ne- Corporation Proẞts Tax)
HON. MR M, K. LO
China Branch. I feel sure, Sir, that
this gesture will be very much appre- clated by the Chinese, and my col- leagues and 1 tender thanks to His Excellency,
our
Mr Caine's Estimate
venue Ordinance with which I must Business
*
14
say
den). But, before doing 50, may Salaries Tux ..
how much impressed I have been Property Tax
Secretary during the difcuit
and
by the way in which he bon carried
out hts onerous duties as Financial
I venture to say that the frankness
Bill.
no
Serious Criticism
Mr
T
to
well as the Chinese Mem-nese community gratefully appre- Council, us bers of Councils, have had occasion ciates Ilis Excellency's concern and of ty
ty of the Colony, as exemplified by I regret that I now come to a point to make various representations to labour for the well-being and securl-
Government on certain aspects
his initiative in providing the popula serious $3,000,000 of
criticism
the Government Administration during his against $1,000,000 administration of the War Revenue the past year. Pending their final tian with air raid shelters, in the construction of which he has taken $2,000,000 Ordinance. In the Report of
outcome 1 feel it my duly to make a Chine, to which I have referred, he few general observations.
such a keen personal interest. Since $ 0,000,000 made it quite plain that "Partner-
Food Control.
his arrival in the Colony the Chinese Members of Councils have had to ships will be assessed us a whole and
To begin with I wish to say a few make numerous representations turbulent times through which the In comparing this with the estim- enquiry whatever will be neces- Colony has passed since the deparate of $10,000,000 from a full income sary into the division of profits be words on the question of Food Co him, and on their behalf, and also
tween partners." The Honourable trol. lure of his distinguished predecessor? tax it should be remembered that
on my own, I desire to tender to His LADITE
The task of a Food Controller is Excellency in expression of our deep (a) Income subject to United the Financial Secretary himself, in
ude for the sympathetic manner Kratitude almost introducing this Bill in March 1040, obviously one of very great dimculty, Kingdom Income Tax Is
and due allowance must be made for in which he has invariably received entirely exempted under the new ald: Several companies.
and are the fact that many things have
ave hits Bie overal important com alo respectively a corporation profits tax to be done in a hurry, I submit that those representations, and is ever-
and a business profils tax on the indispensable qualification of any as far as gether.
May I, Sir, also tender our thanks (b) Pronts tux will be applied profits made in the Colony Food Controller must be some com-
Colonial Secretary, for the only to profits made in Ilongkong, which is levied on the business and mercial knowledge and experience, whereas income tax would have not on individual persons so that no and, however well qualified in the invariable courtesy which you have
to the
the Unofficial Mem Now, to return to the Honourable applied to all profits of resident enquiry as to the ownership of the theory of economics and conscientious chown the Financial Secretary's observa- persons, including companies re-business and the division of the pro- in the discharge of his duties, the pre-bera. My colleagues and I desire to tions.
glstered here, wherever made. Ala is involved. There is, in the sent Food Controller hos hnd The
Honourable the Finanelal
(e) Other income from abroad circumstances, no deduction in re-commercial experience. The record pay warm tribute to you for the con- shown as Its Excellancy's chief ad- Secretary, in his Budget speech on
will not be taxed at all under the spect of personal and family allow of his administration has not inspired spicuous ability which you have.
All confidence that in an emergency January 10, 1941, quoled some now Bill.
characteristic of our arteemed remarks he had made when he in-
It was, however, repeatedly em- In spite of the history of this mate will be well as regards the question viser, which is such a well known
Colonial Secretary. troduced the War Revenue Bill in phasized by the omcial representa-ter, and of the official declarations to of food supply, and I record in this
Continued on Pago-6- this Council in March of the pre-tives on the Committee that Govern, which I have referred, I am sorry 10 Council my grave doubt as to his ceding year. These remarks I can ment was not seeking to raise any have to state openly in this Councilability in turning over certain ro
courage,
and candour with which he has al- ways treated the Unofficial Members of this Counell, and the ability and devotion to the financial interests of the Colony, which char- acterise all his official actions, have won
von their united confidence, admira- tion and respect.
unces.
סמ
ny possible.
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Tel. 20325
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