HONG KONG LEGISLATIVE COUNCIL.
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Although the War Revenue Ordinance has secured considerably more revenue than was anticipated it has failed to secure enough to meet the revised war expenditure either in the current year or in 1941-42. The simplest way, and I must confess the way which first appealed to me, largely on account of its simplicity, is to increase the standard rates possibly by one half from 10% to 15%, but I am satisfied that this would emphasize to an intolerable degree the inequities and im- perfections of the present compromise taxes. I have already stated that it was estimated that the four taxes would bring in 6 million dollars per annum. The revised estimate is $9,700,000. But how is that composed? Salaries Tax is estimated to bring in $1,000,000 as was anticipated, Property Tax $2,300,000 against $2,000,000 while Corporation and Business Profits should bring in $6,400,000 against $3,000,000, but this figure includes not less than $5,500,000 in respect of Corporation Profits and only $900,000 in respect of Business Profits, which is disappointingly small when it is remembered that businesses include all non-incorporated firms, and also professional men who dɔ not pay Salaries Tax. We seem to be faced with three alternatives, first, to perpetuate and increase the existing inequity by increasing without other modification the existing rates, second, to amend radically the present Ordinance with a view to spreading its incidence more fairly over the community, third, without increasing drastically the present standard rates to revert to proper Income Tax which was the original proposal of this Government in 1939, and which Government has always considered to be the fairest form of taxation. In this connection I venture to quote my own words in introducing the War Revenue Bill in this Council in March of last year:
"The Government has accepted the recommendations of the War Revenue Committee and the bill which I am asking to have read to-day for the first time is a Government measure. It is, however, just and proper that I should state at this juncture that in the Govern- ment's view the taxation scheme framed in the bill will not be as equitable or as efficient a means of raising revenue as would be an Income Tax measure on the lines which you, Sir, and your advisers had in contemplation a few months ago.
"It may seem anomalous that an Administration, with a com- petent majority on the Legislature, should deliberately promote one measure believing another to be its superior, but the explanation is not far to seek. This bill's principal purpose is to finance a not inconsiderable free gift from public funds to His Majesty's Govern- ment, and in such a case it would be improper to force upon the would-be donors by the use of that majority a taxation method to which the unofficial members of this Council had objected strongly and unanimously."
Far be it from me to seek to resuscitate a controversy that is dead and buried, but Government has a right to invoke the cooperation of all in finding the best means of meeting war expenditure which, ! am sure, everyone will agree is unavoidable.
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