Enclosure No.2.
Extract from the SOUTH CHINA MORNING POST
dated
15th March, 1940.
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COLONY'S WAR
COUNCIL'S APPROVAL
WAR TAXATION BILL READ SECOND TIME
MINESWEEPERS FOR NAVY AND TENDERS FOR ARMY
SIX MILLIONS EXPECTED
Hongkong's contributions towards the prosecution of the war with Germany, in the form of the expenditure of $5,000,000 on the construction of vessels to be presented to the Admiralty and War Department, and a gift of £100,000 to His Majesty's Government, were approved at yesterday's meeting of the Legisla- tive Council.
A Bill to impose war taxes to meet this expenditure was read a second time, the Financial Secretary stating that approximately $6,000,000 was expected to be realised by this means $1,000,000 from the Salaries Tax, $3,000,000 from the Corporation and Business Profits Taxes together, and $2,000,000 from the Property Tax.
The Financial Secretary added that though the Bill was a Government measure based on the recommendations of the War Revenue Committee, Government was of the opinion that the scheme would not be as equitable or as efficient a means of raising revenue as would be an income-tax measure.
While fully in favour of the scheme, the Hon. Mr. M. K. Lo emphasised the importance of keeping the rates of charge low so as not to discourage the inflow of capital to, or its maintenance in, Hongkong, while the Hon. Dr. Li Shu-fan expressed the fervent hope that all sections of the community would unite in a firm resolution of purpose and of unswerving loyalty to the successful prosecution of the war.
Referring to the expenditure of $5,000,000 on the construc- tion of vessels in Hongkong, the Financial Secretary said Govern- ment's intentions were to build two minesweepers and four harbour defence craft for the Royal Navy and two ferry tenders for the Army.
His Excellency the Governor assured members that the gifts would be received with very grateful appreciation by His Majesty's Government.
GIFTS
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present emergency, the form of taxa- tion contemplated by Government met with general disapproval from the Unofficial Members of this Council, although there was a cor- responding unanimity in agreeing that additional revenue should be raised to enable this Colony as a part, however small, of the Empire to bear its share of the expenditure incurred in furthering the common cause. That unanimity was fittingly expressed at the meeting of this Council last Thursday by the Hon. Senior Unofficial Member in support- ing the resolution that a Bill on the lines of that drafted by the War Revenue Committee should be intro- duced.
Terms of Reference
That very representative Com- mittee, which included several Un- official Members of this Council, was appointed by Your Excellency with terms of reference which finally became:
"(1) To examine the draft Income Tax Bill and advise on the detailed provisions which would be desirable in such a measure if it were adopted, having regard to the special circumstances of this Colony;
and
revenue
(2) to advise whether the best method of raising additional for war purposes would be such an Income Tax or, alternatively, any other measure or measures of taxa- tion of which the incidence would be on substantially the same classes of the community as an Income Tax and which could not be passed on to the poorer classes."
The present Bill is the Bill as prepared by the Committee, with certain verbal alterations which are set out in the Table of Variation. No radical modification has been made: nothing has been added to or subtracted from the recommendations of the War Revenue Committee, and the temporary nature of the measure is made clear by the provision that no tax shall be collectable in any year of assessment subsequent to the year of assessment in which the war is terminated.
Free From Certain Complications
As explained by the Committee in their Report the combination of taxes proposed constitutes a partial income tax freed of certain complications owing to its limited scope and de- signed to meet the objections of those, prominent among whom were the Chinese Members of this Council, who deprecated inquiry or inquisi- tion into personal circumstances, (Director of Public Works), the Hon. particularly of partnerships, in- His Excellency the Governor, Sir Sir Henry Pollock, the Hon. Mr. J. J. evitable in income-tax proper which Geoffry Northcote, presided, and Paterson, the Hon. Mr. M. K. Lo, the is based on the assessment of in- there were present H.E. the General Hon. Mr. S. H. Dodwell, the Hon. dividual capacity to pay. The Bill Officer Commanding, Major-General Dr. Li Shu-fan, the Hon. Mr. A. L. also avoids the danger of double A. E. Grassett, the Hon. Mr. N. L. Shields, the Hon. Mr. W. N. T. Tam taxation by excluding from taxation Smith (Colonial Secretary), the and Mr. C. B. Burgess (Deputy Clerk income which is liable to income tax Hon. Mr. C. G. Alabaster (Attorney of Councils).
in the United Kingdom or any other General), the Hon. Mr. R. A. C.
Moving the first reading of "A Bill part of the British Empire, and by North (Secretary for Chinese Affairs), to impose war taxes and to regulate exempting corporations the whole of the Hon. Mr. H. R. Butters (Financial the collection thereof," the Financial whose profits are liable to such Secretary), the Hon. Dr. P. S. Secretary said: When in connection taxation; also taxation under the Selwyn-Clarke (Director of Medical with the budget for the current Bill is confined to profits made in the] Services), the Hon. Comdr. G. F. financial year the proposal was Colony. Hole (Harbour Master), the Hon. mooted in this Council to impose Mr. T. H. King (Commissioner of new taxation to raise additional Police), the Hon. Mr. A. B. Purves revenue for war purposes during the
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To be continued,