My friend the Honourable Mr. Caine has so ably and, in my view, rightly maintained that Income Tax is the most equitable form or raising revenue. Rates and import duties have always been found to bear most heavily on those sections of the com- munity least able to sustain them.
Looking at the problem from the point of view, a doctor and not from that of a business man, my conception of Income Tax follows these lines:
Government
endeavours to work out, as fairly as possible, the mini- mum sum necessary for the adequate feeding, clothing and housing of an Individual.
Ability to Pay
It then examines the financial res- ponsibilities of that individual- whether or not he has a wife, a child or children and one or more dependent parents and relatives, and makes allowances accordingly. Only when the total for these commitments and, I assume, in this Colony, for education has been ascertained does the Government ask for a contribu- tion from the balance towards the extension of the maintenance-or
of Defence, essential organisation Civil Administration and Social Ser- vices.
maintain
I venture to
that the country level of Income Tax in a provides evidence of the sense of responsibility which the community has acquired in the carrying out of its fundamental obligations.
a
That, in fact, relatively high rate of Income Tax indicates that a country has accepted and intends to honour its international pledges; that a high level of incorruptible and efficient Administration has been achieved and that the Government has recognised its duty to provide for the young, the old, the sick and for those in want.
Up to the present, Hongkong has only fulfilled a part of the complex duties of a modern state.
For Social Services
The instrument of Income Tax, as now proposed by Government, is brought forward as a measure to meet the increased cost of the addi- tional services necessary to give effect to the determination of the British Commonwealth to maintain freedom, law and order among nations.
I believe that there are not a few present in this Council to-day who look forward to the time when it
X will be possible to use Income Tax
not only for defence, but also for the development of the social services. and, in this Colony, education, which are so urgently in need of increased finance.
The argument that Income Tax is unsuited to the particular set of con- ditions prevailing in Hongkong calls to mind the opposition encountered last year to two Health measures which were introduced to protect this Colony. I refer to the declaration of Canton as an infected port owing to an outbreak of small-pox and to the introduction of compulsory vaccina- tion here in the spring of 1938.
There were many who shook their heads and prophecied that the first measure would jeopardise the pros- perity of this Colony and that the intrusions on home privacy incidental to universal vaccination against small-pox would be bitterly resented so that the measure would be im- practicable.
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Entirely Successful Both measures were entirely suc- cessful as proved by the lessening and, for many months, the complete disappearance of the virulent strain of small-pox which had previously exacted a heavy toll of human life. Trade was not adversely affected and members of the general population were most helpful and co-operative in securing a well-vaccinated com- munity.
I would urge that arguments, simi- lar in content, were brought forward when Income Tax was first intro- duced into the United Kingdom and, indeed, in relation to many forms of social legislation.
I am
confident that Hongkong, which has met so many upheavals and so successfully adjusted itself to changed conditions, will accept this new form of taxation in that coura- geous spirit which it has often shewn in the past.
It has been my privilege to work for the past eighteen months in close contact with several of the Chinese members of his Council. During that time, it has been my invariable ex- perience that they have always been willing to set aside their own in- terests and the interests of a class for the sake of the community whom they serve as a whole. Hence, I have no doubt as to the ultimate out- come of their deliberations in sup- port of this measure. (Applause).
MAJOR-GEN. GRASETT
"Very Wrong Not To Consider a Long War"
COLONY'S RESPONSIBILITY
H.E. The General Officer Com- manding said: Your Excellency, Hon. Members,-I had not intended to take up the time of this Council by giving my views on this rather com- plicated question of Income Tax be- cause it is one on which I do not pretend to have any detailed know- ledge. It will be
presumptuous of me to claim to have any detailed knowledge of the financial workings and the details of business in Hong- kong, but since I returned from the North I have been reading the speeches of Hon. Members delivered a week ago, and it occurred to me that the wider issues of this question had perhaps been obscured. For that reason I am glad that Your Excel- lency has allowed me to speak to- day.
What are the facts? The facts are that the British Empire is now en- gaged in a war of the greatest mag- nitude and no one can predict the future. Hongkong is as much con- cerned in this war as any other part of the Empire. If things go wrong, Hongkong will be the first to suffer. I think Hongkong is very fortunate at this moment that the war is so far from her shores.
I have heard it mentioned that Hongkong's membership to the Em- pire is a rather limited and loose one and that her responsibilities, there- fore, are correspondingly limited and loose, but I don't believe that view can be proper because it has no foundation of truth. It has also been
60
stated that Hongkong is of consider- able strategic importance to the Em- pire, and that it is only right and should Britain proper that Great provide for her protection. Hongkong has little or no strategic importance, and in fact might well prove to be an embarrassment. Hongkong is de- fended and will continue to be de- fended largely on the responsibility of Great Britain, because it is a Bri- tish Colony, and I think it is as well
who for the people
inhabit this Colony to realise what is being donc for their interests and security.
Military Contribution
P
re-
The Military Contribution presents a small percentage of the costs to Great Britain for the de- fence of this Colony, and I doubt
is whether it
the realised that amount paid in the form of Military Contribution is more than refund- ed by the amounts spent by the Service departments in this Colony. If this war is not prolonged, we obviously will have much to be thankful for in every direction. If it is a long war, the financial side is perhaps as important as the military side and heavy financial as well as human sacrifices will be required. I think it is very wrong if we are not to consider a long war,
and Hong- concerned kong is fully
with the financial period of the war.
It seems to me to be wrong to use the term "War Gift" in connection respon- with Hongkong's financial sibility, and it seems we should not discuss whether three, five or ten millions should be given as a war gift to Great Britain. Hongkong may be required to pay to the limit of her resources and no one can fole- cast the amount. I know full well that Members realise this.
The question in dispute is the method of taxation in order to raise the money in connection with the war. It seems to me that the machinery now set up must be capable of extension.
A year ago the Government set up an Income Tax Committee. It was composed of members of the be-t ability and standing in the Colony who were more than able to express an opinion on the subject.
Committees Recommendations As I understand it, reading the Re- port of the Committee, the recom- mendations of the Committee were made after cool deliberation in pence
with a view to what is the best way of raising capital should Government require more capital in peace. I was under the impression that the Com- mittee recommended Income Tax as the best form of meeting the Gov- ernment's needs, but I stand to cor- rection as I may be wrong.
In any case, there was then a strong feeling in favour of Income Tax.
The situation now is that a war arises, and with it heavy demands and financial sacrifices, which no one disputes. But on Government proposing to introduce Income Tax, it has been met by heavy and or- ganised opposition, which I consider to be a very surprising situation.
De!
Income Tax is universally ad- mitted as the only fair form of raising revenue. In Hongkong, where a considerable section of the public are very poor, it is clear that the limit has been reached and indirect taxation cannot extended much further. On the other hand there is in Hongkong a section of people who enjoy a very high standard of living and are very prosperous. It will seem that any form of taxation other than Income Tax is not likely to be distributed equally and fairly.
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