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HONGKONG LEGISLATIVE COUNCIL
The Colonial Secretary continued I should first like to explain to the Council that though, for obvious l'es. no notice could be given of this motion, for if notice had been given it is clear that opportunities would have arisen for evading the duty, the Government has no desire to stifle criticism and although I trust the motion will be passed this afternoon so that it can come into force forthwith, the Government will be prepared to give all reasonable facilities for a full dis- cussion of the proposal at an early date if any member, after considering the effects of the changes at his leisure, feels it incumbent on him to give notice of a motion for their modification.
In my remarks on the introduction of the Supply Bill I made reference to the need for additional revenue and I men- tioned that the Government hoped to raise this revenue in part from certain minor changes estimated to bring in about $138,000. It was obvious, however, that this sum was insufficient for our needs, and I referred to certain measures which I should lay before you later. After careful consideration the Govern- ment has decided to recommend to this Council the raising of some of the Liquor Duties whereby we hope to increase our Revenue by about $600,000 next year and possibly a little more when conditions have returned fully to the normal.
If Honourable Members will refer to the papers just handed to them and will compare the two they will see first that the opportunity has been taken to recast the form of the resolution imposing the liquor duties, but I would point out at once that no change has been made in the duties on the more heavily taxed liquors. I would hasten to add, however, that this is from no special regard for the pockets of those who drink these more expensive forms of liquor, but be- cause the Government is advised that this type of liquor already bears as high a duty as can in present circumstances be properly charged upon it, and that this duty works out far more heavily in proportion than the duty charged upon the so-called Chinese wines. The only alteration in what are termed European type liquors is the abolition of the special concession of 50 cents a gallon on wines imported in wood. I am informed that the bottling industry is a very small
one, that the differentiation has given rise to difficulties in the collection of the duty, that the purchasing public has shown a growing distaste for locally bottled wines and that the differentiation is no longer advisable and can be abolish- ed with advantage to the revenue and no detriment to legitimate trade.
some cases.
The present system of duties on native wines and spirits has proved unsatisfac- tory and it is now proposed to drop the elaborate differentiation into classes which have been found in meaningless, and in some misleading, and to base the duties on the more scientific method of calculation by alcoholic strength throughout. Native liquor bears at present a very light burden of taxa- tion and the new duties have been calcu- lated with a view to a considerable in- crease in the present very inadequate revenue derived from such liquor. Even with the new duties the tax on Chinese spirits will be far less in proportion than on the European type liquors. I would ob- serve that the so-called native wines are in and are, therefore, properly assessed on fact all spirits produced by distillation the alcoholic strength like imported spirits. The duty which we now propose to on a normal alcoholic levy is based strength of 25 per cent. by weight, the duty on which will be $1.20 per gallon, and five cents per gallon will be added for every additional one per cent. of alcoholic strength by weight.
The present rates on native liquors brought in about $800,000 in 1924, the last normal year, and about $665,000 in 1925. I wish to deal first with native liquors other than New Territories liquor dutiable at the special rate of twenty cents a gallon. The consumption of these liquors in 1925, apart, of course,
from smuggled liquor, was:-
605,113 gallons imported OD
which duty recovered was..$390,300 399,260 gallons locally
duced duty recovered....... 242,556
.$632,946
Total
pro-
The new duties on these liquors are estimated to bring in an additional $484,000 being $310,000 on imports and $174,000 on local produce.
Secondly, as regards the specially rated New Territories liquors, the total pro- duce of which we have records was, in 1925, 165,137 gallons on which the duty
HONGKONG LEGISLATIVE COUNCIL
was $33,027. From this must be deduct- ed 26,004 gallons exported to urban dis- tricts, and a quantity which I am advised cannot well be less than 40,000 gallons smuggled into those same districts, which would reduce the consumption in the New Territories to 99,133 gallons on which the duty would be $19,827.
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mates now before the Council and the figure should be amended to $1,800,000.
cover
A new provision has been inserted to various special liquors which it is im
unenumerated liquors, ie, the possible to enumerate individually and while this has properly been placed at the highest rate you will notice that, to avoid hardship, power has been given to the Superintendent of Imports and Exports to classify such liquors accord- ing to the classes to which they properly belong. Under the existing classification every unenumerated liquor is entitled to entry at 40 cents a gallon, and it may well be that liquor which ought properly to pay a higher rate comes in too cheap-
In the existing tariff these New Terri ritories liquors are rated at the very low duty of twenty cents a gallon for con- sumption in the New Territories what ever their alcoholic strength. It is pro- posed to place spirits distilled in the New Territories whether consumed there or not, on the same level as other Chinese liquors. The present system has given rise to extensive smuggling, and howly by the fortuitous ever honest the distiller may be he can- not say what his purchaser will do with the liquor purchased. Undoubtedly large quantities of the low-taxed spirit have found their way into the urban districts by train, motor-car, lorry and truck to the detriment of the revenue, and in defiance of the law.
When the lower duty in favour of the New Territories was first imposed there was no railway and there were no motor roads, and the New Territories Dis- tilleries were small concerns. Now most of the larger distilleries have moved out into the New Territories and there are comparatively few left on Hong Kong Island. The standard of living has risen considerably in the New Territories and it is felt that there will be little hardship in the raising of the duties to a parity with those in the rest of the Colony. In view of the greatly improved methods of communication it has become almost impossible to prevent smuggling from the New Territories to the rest of the Colony and two rates of duty for the same article in what is really one territory can no longer be defended.
The increased rates should produce a revenue of about $120,000, an increase of roughly $100,000, on the liquor consumed in New Territories and a total increase of $584,000 on the present revenue from all native liquors.
With the improved conditions hoped for next year, the Government feels justi- ed, if the proposals now put forward are approved, in anticipating a total increase of some $600,000 in the revenue from liquor duties over and above the figure of $1,200,000 inserted in the draft esti
circumstance that
it has not been expressly enumerated.
Finally I come to the last new pro- vision, viz., a reduction of ten cents a gallon in favour of locally distilled spirits. Spirits of the Chinese type manufactured in the Colony are subject to excise supervision and restriction which, while they result in a superior article, undoubtedly tend to increase the cost of production. Distilleries situated outside our borders are not subject to these restrictions and it is thought equit- able that the local product should not be. penalized in this way without some com- pensating advantage. I think this small concession to the local producer will meet with the approval of Honourable Members.
I am afraid I have delayed the Coun cil far too long, but I wished to make the intention of the Government as clear as possible. I now formally move the resolution which I have already read and would merely remind Honourable Mem- bers that while the Government regards it as important that the resolution should be passed to-day, ample opportunity will be given if derired for subsequent discussion.
THE COLONIAL TREASURER second- ed, and the motion was approved.
Council then adjourned until Thursday, November 4th.
FINANCE COMMITTEE
followed, the COLONIAL SECRETARY presiding. A meeting of the Finance Committee
The Committee considered H.E. The Governor's message No. XI.
Votes amounting to $363,920 to supple- ment the estimates of 1926 were approved.