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HONG KONG LEGISLATIVE COUNCIL.
married with four children, each could claim allowances up to $9,000, making a total of $90,000, so that the balance taxable would be only $10,000. Apart from the provision under the Salary Tax, that 4% is payable upon the first $5,000, it is obvious that such partners would be in a more advantageous position if taxed under the Salaries Tax.
It is true that the tax which will give rise to the greatest difficulty, and will involve the most personal inquiry, is the Business Profits Tax. I have always appreciated the objections to this tax; its probable yield would not, by itself, appear to justify its imposition, But, Sir, I submit that this tax should not be considered in isolation, but only in combination with the other three taxes. After all, the Bill represents on the part of many members of the Committee a compromise of individual views and opinions for the sake of a worthy cause, and it is my considered view that the argument that on the ground of equity such a tax must be imposed if there is a Corporation Profits Tax, is quite unanswerable.
To illustrate the effect of the provisions of the Bill let me take an imaginary case of a wealthy refugee, with capital invested in the Colony. If he has shares in companies he has nothing whatever to do, as the tax will be deducted at source. If he has invested capital in factories or firms of which he is not the actual managing partner or manager, here again he has nothing to do. He can come and go without any question of residential liability. If he lends out money on mortgages His bank balances are he has nothing to do, and has no tax to pay. unaffected. If he owns a house he has to do no more than what he has to do already, namely, fill in a return of the net value of the property, and pay 5% as additional rates.
Honourable Members of this Council may be interested to know that the provisions of this Bill are based on a draft Bill drawn by Mr. Caine in collaboration with the Chairman of the Committee, my Honourable friend the Attorney General. I would like to quote the following from a statement prepared by Mr. Caine on the "Principal Differences between the War Revenue Bill and the Income Tax Bill":
"1. GENERAL. An Income Tax seeks to tax every source of each individual's income and to make allowances for his family responsibilities and other individual circumstances. Although much may be collected at the source it is ultimately an individual tax and may entail much enquiry into personal affairs.
The new Bill proposes to take each of the main classes of income separately and tax them at rates adjusted only approximately to capacity to pay. At some sacrifice of the refinements of an income tax it thus avoids many problems which arise in the administration of those refinements and removes some of the features of income tax which are objectionable to the public.
2.
SCOPE OF TAX. The taxation imposed by the new Bill will cover incomes from rents of property in Hong Kong, salaries
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