NOTE
4
In 1939 a Taxation Committee of which Mr. S. Caine, then Financial Secretary, Hong Kong, was Chairman, presented the report Sessional Paper No.2 of 1939, which recommended among other things the introduction of a general income tax. The summary of the condusions of the report appears at (5) in file 54002/39, Hong Kong Taxation. When these proposals were published both the Chinese and the Committee of the European Chamber of Commerce recommended the Governor to impose taxation on lines other than income tax.
When the budget was introduced, the Secretary of State instructed the Governor that the official majority should not be used for enforcing the passage of new taxation measures and that he should not press for income tax against the wishes of the unofficial members of the Council, provided the revenue was forthcoming by other measures. He also added that, if income tax measures were acceptable, he would have no objection to the inclusion of an automatic repeal clause in the Bill providing for its repeal at the end of the war. In a demi-official letter dated the 18th Novermber, 1939 (29) the Governor stated that the Taipans of Hong Kong were definitely opposed to income tax. Notwithstanding the persuasive eloquence of Mr. Caine the tax was turned down. A War Revenue Committee was appointed to examine the draft Income Tax Bill and its report No. 1 of 1940 appears at (21) in 54002/ 1940. What they proposed was a Corporations profit tax, business tax, salaries tax and a property tax. The Governor stated the proposed measure is a partial income tax but its incidence will not be as equitable as income tax proper. On this, Ordinance No.13 of 1940 to impose War tax was passed. The Inland Revenue Commissioners made some criticism, vide (38). Not only did they consider the draft Bill to be loose but they thought the incidence of the salaries tax as far less equitable than a general income tax. They added certain detailed criticisms on the drafting which were sent out to Hong Kong. Further consideration was given under a report of the Reconstituted War Revenue Committee No. 4 of 1941, (11) in 54002/41, as a result of which an amended and consolidated Ordinance No.14 of 1941 was passed and provided for a salaries tax (at 6% upon, the first $5,000 and 14% upon the remainder), a profits tax (at 7% upon the first 859 000 and 14% on the remainder), and an interest tax of 14% on interest arising under debentures, mortgages, Bills of Sale, etc. This Ordinance came into effect on the 27th of June, 1941, vide copy er 54002/41.
Thus it will be seen that there was not a straight- forward Income Tax in Hong Kong before the War; its introduction had been strenuously opposed; but there was a War Revenue Ordinance providing for taxation as a War measure on properties, salaries, profits and interest.
11. 9.45.