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HONG KONG LEGISLATIVE COUNCIL.
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of persons employed in Hong Kong and profits of all business carried on in Hong Kong. Income which would have been liable to a full income tax but will not be affected by the new Bill includes interest (other than dividends which will suffer indirectly by the tax on company profits) and all income derived from outside the Colony but remitted into it. Very much the greater part of the total income will therefore be caught by the new Bill, but the restriction to specified classes of income will simplify administration (e.g. the problem of 'remittance' will not arise) while the exemption of interest should completely remove any danger of flight of liquid capital."
On December 4th 1939, Mr. Caine, in view of his pending departure, wrote to each member of the Committee a letter enclosing a draft Report of the Committee as representing what he hoped the Committee would be prepared to agree to, rather than what had already so far been agreed. In the course of his draft Report the following observation occurred.-"The best alternative means of imposing taxation of approximately the same degree of severity and having approximately the same incidence as the proposed Income Tax appears to be a combination of taxes assessed on property, on salaries and analogous incomes and on business profits made in the Colony on bases and at rates calculated to impose very broadly the same degree of sacrifice Such a combination of taxes on the several classes of persons affected. would constitute a partial income tax, covering much the greater part of the income which would be liable to a full income tax but freed of many complications owing to its being partial in scope and only approximately adjusted to individual ability to pay. In particular much of the enquiry into personal circumstances which is apprehended from the administration of income tax should be avoided.”
I have stated that, subject to one point, I do not wish to modify in any way the remarks I made in this Council on November 9th, and that point concerns my remarks as to the capacity of the Colony to pay. Your Excellency, on November 16th, made it quite clear that Government had not determined to raise a War Budget Revenue of any predetermined sum, so that whatever amount this Bill will in fact raise, that would constitute the free gift to His Majesty's Government, while engaged in a life and death struggle. I therefore agree that no question of the Colony's capacity to pay arises, once the taxing measure has been agreed.
The Committee, in its Report, expressed the hope that "in view of the purpose for which the four taxes will be used, there should be no attempt at evasion." By paying up to the full in accordance with the legal liability of each, and by assisting the administration in every way possible, so that the maximum amount collectable under the measure may be raised, the Colony will justify the Committee's hope, and honourably carry out its obligation as a part of the British Empire. (Applause).
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