142
HONG KONG LEGISLATIVE COUNCIL.
different basis for the assessment of the tax on profits made by those carrying on a trade profession or business, with a view to increasing the yield from this tax which had proved disappointing on the previous basis owing to the loopholes for evasion thereby afforded; fourthly, a new tax on the one broad source of unearned income hitherto untaxed, namely, an Interest Tax on certain classes of readily ascertainable interest arising in or accruing in the Colony on debentures, mortgages, bills of sale and business loans; and fifthly, the raising of the original basic rates of taxation from five and ten It was estimated per cent. to six and twelve per cent. respectively. by the Committee that at basic rates of five and ten per cent. the yield in 1941-42 from the five taxes would amount to $11,000,000; since this sum would not be sufficient to meet the anticipated war expenditure during that year the Committee recommended an increase in the basic rates to six and twelve per cent. in order to produce an estimated yield of $13,200,000.
At the last meeting of this Council Your Excellency spoke of the need for a greater economic war effort on the part of the people of Hong Kong and invited comparison with the effort and sacrifices which are being made by the people of the United Kingdom. In the hope and belief that Your Excellency's words were timely and acceptable to all, Government, while appreciating the recommendations of the reconstituted War Revenue Committee, proposes to go one step further and except in the case of Salaries Tax to which I shall refer presently raise the rates of the war taxes to seven and fourteen per cent. The estimated yield from the five war taxes on this basis is $15,400,000 per annum. If this sum is realized, and taking into account the $5,000,000 surplus of revenue over expenditure in 1940-41, the expected total revenue for the current financial year more than equates the commitments at present known. I am afraid, however, that other commitments will inevitably appear; in fact some are already looming on the financial horizon.
The Bill which is now before Council provides therefore for In taxation at the basic rates of seven and fourteen per cent. implementation of Your Excellency's pledge that attention would be given to the question whether this further increase in the basic rates. to would re-act harshly on lower-salaried residents who have maintain a family elsewhere than in the Colony, having regard to the very considerable increases that are being made in the allowances for wives and children, Government has decided that
of Salaries Tax
the first five thousand dollars payment should not be increased beyond the six per cent. recommended by the Committee. The effect of this concession is that a with a wife and no children will not pay more in Salaries Tax than he did last year unless his income is more than $11,000 while a man with a wife and one, two or more children will not, generally speaking, pay more unless his income is over $15,000. I was, however, authorized to-day by Your Excellency to say that further consideration will be given to the allowances for the third and fourth children; if
on
man
12