Q
es
143
4
(a) Defence expenditure to constitute a separate Defence Budget.
Revenue to be oredited to this Budget would consist of the proceeds
of income tax which would be introduced immediately without waiting
for preliminary enquiry suggested by the Taxation Committee Report
of April 1939. The standard rate suggested in the first place is
19% with surcharge of 5% on excess of income above about £1,000
and 10% above about 22,000. To become effective from the 1st April
1940 which is the earliest date considered to be administratively
practicable.
Following expenses would be met from income tax
proceeds;-(a) administrative costs of Income Tax Department (b) existing Defence Services excluding defence contribution 1.e.
Volunteer Forces and Air Raid Precautions estimate for which in
1940/41 totals $1,600,000 for 15 months (o) special war expenditure
eg: cost of German Internees, Censorship, Department of Information (a) acquisition or construction in Hong Kong of small vessels or
aircraft or both for the defence of the Colony provided Naval or
Air Force Authorities consider such expenditure useful (e) balance
to be voted as a free gift to His Majesty's Government additional
to fixed Defence contribution in aid of general war expenditure.
Yield of income tax at 10% was very approximately
estimated by the Taxation Committee at $ 10,000,000 per annum. Part
of this would be offset by loss to the United Kingdom exchequer
cwing to Dominion income tax relief. Total available for purposes
(d) and (e) combined should be of the order of 17,500,000 per annum unless expenses under (a) are unexpectedly heavy owing to e.g. to
full mobilization of volunteers.