HONG KONG LEGISLATIVE COUNCIL.
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"(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
(2) to advise whether the best method of raising additional revenue for war purposes would be such an Income Tax or, alternative- ly, any other measure or measures of taxation 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.
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 designed to meet the objections of those, prominent among whom were the Chinese Members of this Council, who deprecated inquiry or inquisition into personal circumstances, particularly of partnerships, inevitable in income tax proper which is based on the assessment of individual capacity to pay. The Bill also avoids the danger of double taxation by excluding from taxation income which is liable to income tax in the United Kingdom or any other part of the British Empire, and by exempting corporations the whole of whose profits are liable to such taxation; also taxation under the Bill is confined to profits made in the Colony.
The Bill contains four taxes. A Property Tax of 5% per annum on the rateable value of land or buildings as assessed for rating purposes. And here I should explain that as the Rating Ordinance, 1901, prescribes a tax to be borne by the occupier it has been considered necessary to indicate clearly that the Property Tax is intended as a tax to be charged on and borne by the owner, which I think is in accord with the views of the War Revenue Committee. The purpose of this amendment is to prevent the passing on of the tax, as it makes clear that the certificates of fair rent issued under Section 6 of the Prevention of Eviction Consolidation and Amendment Ordinance, 1939, cannot take into consideration a tax definitely described as to be borne by the owner. You have, Sir, authorised me to state that if any attempt is made generally to pass on the Property Tax to tenants Government is prepared to introduce such legislation as may be considered necessary to prevent this.
The second tax is a Salaries Tax on nearly all salaries and pensions derived from employment in the Colony. The first $5,000 of the taxable
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