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HONG KONG LEGISLATIVE COUNCIL.
steady increase in the number of countries in which income tax exists and in the reliance which is placed upon it in those countries as one of the most important sources of revenue.
One further point on this matter of evasion. A good deal has been made of the point that at the present moment it is unsuitable to introduce Income Tax. Looking from the point of view of adminis- tration I am quite sure that war-time conditions and the control of war activities, business and otherwise, give the administration a great many more opportunities to detect evasion than they would have in ordinary times.
There is only one other thing which strikes me in this talk of evasion-it is notorious that other taxes are evaded to a greater or less extent: e.g. import duties on tobacco and liquor are certainly not 100% effective, and from time to time Government is obliged to institute prosecutions for failure to pay, say the stamp duties or wireless licences. It does not occur to anybody, however, to suggest that these taxes should be abolished because they are not quite 100%. effective, and if the suggestion is made in the case of income tax I cannot but suspect that it covers some other motive.
A good deal has been made of the alleged enormous expenditure on the collection of income tax. The closest estimate of cost we can now make is something between 3 and 4 lakhs per annum, practically all of which, of course, will be for the staff required. This is in the first place a very small percentage of the expected yield. It will moreover in present circumstances be only to a small extent expenditure on new staff since we expect to draw the majority of the staff required from other branches of the Government service whose activities will have to be reduced to some extent and whose leave is, under present arrangements, being drastically curtailed, so increasing the number of available officers.
It is objected that the tax will cause a great deal of extra private expenditure particularly in the keeping of accounts and preparation of returns. The ordinary man will not need any expert assistance in the preparation of his returns unless he is seeking to avoid taxation. The officials of any income tax department run on the principles of the British income tax administration will be perfectly willing to give quite honestly any advice which may be required by the individual as regards the allowances to which he is entitled. As to business firms the extra expenses would be small except in the case of firms which do not now keep any accounts at all. For those firms I can only suggest that the necessity of compiling accounts for income tax purposes should be a blessing in disguise and not a matter to be regretted. I might here refute the general apprehension that the keeping of accounts in English and the rendering of returns in English will be obligatory; no such intention has ever existed.