HONG KONG LEGISLATIVE COUNCIL.
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It is now possible to look back upon the first year of assessment, which began on the 1st April, 1940, and ended on the 31st March, 1941, and to enquire to what extent the above expectations have been realized. The actual revenue derived from the four war taxes for that year of assessment was approximately $9,000,000 or fifty per cent. more than the original estimate, and I am glad to say that the cost of collection, that is to say the cost of the War Taxation Department, was only 3 per cent. of the total amount collected. No expenditure was incurred during the financial year which ended on 31st March, 1941, in respect of the locally-built vessels to be presented to His Majesty's Government and consequently the whole of this honourable liability, now increased to $5,220,000 because the tendered price of the vessels for the War Department proved to be higher than anticipated, appears in the printed estimates for the financial year 1941-42. But on the other hand the abnormal expenditure imposed on the Colony by war conditions has proved during the past twelve months or so to be very much greater than the original estimate. In addition to the expenditure incurred in implementing, in common with all other parts of the Empire, the instructions of the Imperial Government in such matters as censorship, economic warfare and trade control, the political situation in the Far East has made it necessary to take very extensive and sometimes very expensive measures for the defence of the Colony. Apparent to all are such measures as the provision of tunnels and other forms of protection against air attack, the mobilization of the Naval Volunteer Force, and the intensive training of the Volunteer Defence Corps; other measures which I cannot mention here are well known to Honourable Members.
Long before the end of the financial year 1940-41 and while the estimates for 1941-42 were in preparation it became clear that the yield from the war taxes would be insufficient to cover the ever- growing war expenditure and in his budget speech on 23rd January last the Honourable Mr. Butters announced that His Excellency the Officer Administering the Government had reconstituted the War Revenue Committee to re-examine and advise Government on the existing measures of War Taxation in the light of the Colony's present financial position and the actual receipts from the four taxes imposed by the War Revenue Ordinances of 1940.
The reconstituted War Revenue Committee presented its Report on the 23rd May last. The Report has been laid on the Table of this Council and has been published as Sessional Paper No. 4 of 1941. It is therefore available to all who wish to read it and I do not propose now to go into the facts and principles which guided the Committee in coming to its conclusions and recommendations, which, as in the case of the original Committee, were set out in a draft Bill. It is necessary to say, however, that the main recommendations involved, firstly, a revision of the various clauses of the War Revenue Ordinances of 1940 with a view to adjusting the principal inequities in those Ordinances; secondly, an increase in the allowances for a wife and children made to those persons paying Salaries Tax; thirdly, a