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Chau Tsun nin
HONG KONG LEGISLATIVE COUNCIL.
It is known with what little success the attempt to introduce Income Tax in Malaya has met, but what is still more important is the evidence from China itself where the Income Tax Laws, which had been most carefully worked out, have proved to be an absolute failure almost from the time of their institution.
I do not think it necessary for me to put forward any theories for these failures, but I do repeat that a very clear explanation should be the starting point and not an incidental matter for our own deliberations.
The Taxation Committee appointed by Your Excellency in October, 1938, had already, as I will admit, a background of very abnormal conditions in this Colony, arising out of the Sino-Japanese hostilities which had then been in progress for over a year. That part of their Report which deals with Income Tax cannot, therefore, be said to have ignored entirely the unusual commercial and financial situation which then existed and might continue for an indefinite period. It is, however, worthy of note that in furnishing replies to a number of practical difficulties in the institution of Income Tax relating to questions which the Committee itself had raised, a very strong note of caution was sounded, and I desire to refer particularly to certain preliminary and conditional recommendations.
These include the absolute necessity for a detailed investigation of the whole field with the assistance of an "expert", and to this I would personally add the maintenance of numerous experts, far beyond the preliminary or introductory stages. And further, the Committee recommended that the imposition of this form of Tax should be preceded by the formation of a large and substantial body of favour- able opinion in this Colony.
The experts whose reports I should like to hear before this matter proceeds any further, are not those who can assure us how success- fully Income Tax works in other communities, but why it has failed amongst Chinese communities. As for those who would be responsible for administration of Income Tax they would all have to be persons with expert training and much experience.
The hope of obtaining such advice and permanent assistance does not, under existing conditions, appear at all bright. The alternative of procuring officials who have to gain their experience at the expense of the smooth working of the system, which should be guaranteed from its initiation, is a sure way of maintaining its unpopularity.
I am convinced that the majority of the Chinese community believe that it will never be possible to approach that stage at which the incidence of the Tax falls fairly and equitably amongst those who should contribute their more or less towards it. In the Chinese business community the conception of profits on investment differs fundamentally from that which is essential for the assessment of the
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