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HONG KONG LEGISLATIVE COUNCIL.
income after deduction of personal and family allowances will be chargeable at 4% and thereafter a 10% rate will apply. No abatement in respect of life insurance premiums was recommended by the Committee.
The third and fourth taxes are respectively a Corporation Profits Tax on profits made in the Colony of companies incorporated or register- ed under any enactment or charter in force in the Colony or elsewhere at a rate of 10% without any abatement, and a Business Profits Tax on profits made in the Colony from all businesses and professions which is levied on the business and not on individual persons so that no inquiry as to the ownership of the business and the division of the profits is involved. There is, in the circumstances, no deduction in respect of personal and family allowances and the rate proposed is, after a general exemption up to $10,000 per annum, 5% on the excess over $10,000 up to $100,000 and 10% on the excess over $100,000.
I think I am correct in saying that the Committee regarded these taxes not so much as four several taxes but as four forms of one tax and that the acceptability of that one tax depended on grounds of equity on the acceptability of each of its component parts.
The Committee offered no estimate of the revenue expected to be raised by their Bill and in the nature of things such an estimate must be largely guess work, but Mr. Caine, who was largely responsible for framing the original draft of the Bill, suggested that Salaries Tax might produce $1,000,000 and Corporation and Business Profits Taxes together $3,000,000, while the receipts from the Property Tax are calculable in the neighbourhood of $2,000,000. How it is proposed to devote this revenue to the prosecution of the war will be explained in part when the first resolution standing in my name is moved, and full details are given in the application for the necessary supplementary votes which will be submitted to Finance Committee this afternoon.
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 Government'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 competent 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 Government, 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.
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