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preserving the Colony as a haven for the "Refugee.'
The rates to be imposed should not therefore be
sufficiently high to drive away this capital.
(4) Administration of income tax would not be
possible at an economic cost; a large and expert
But the European staff would have to be imported.
Committee point out that in Ceylon the cost has been
about 4 per cent of the yield, and that in any case it
would diminish after the initial years.
(5) Economic and industrial development
(particularly of small factories as yet in their infancy)
would be seriously affected. But the Committee suggest
that factories could be compensated in other ways e.g. by the English industrial de-rating system or by
a general reduction in the assessment. Factories might
well prefer an income tax, which would affect their
profits only, to an increase in assessed rates which
would be payable even when no profits could be shown.
The Committee suggest that, having regard to
the necessary minimum cost of an income tax, it would
be uneconomic to impose it at a very low rate and think
that it would probably be found that the maximum rate
On its first should eventually be púteat 10 per cent.
institution, however, the rate should be 5 per cent, in
which case the annual yield might be something in the
nature of
$5mills This being so the Committee suggests that
the imposition of income tax might be followed by
remissions n other forms of taxes.
The Committee's conclusion is that the
advantages of an efficiently administered income tax
over other forms are overwhelming from the point of view
of equity but the whole question turns on the possibility
of