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HONG KONG LEGISLATIVE COUNCIL
Then came the Budget Debates of the 9th and 16th November, 1939, in the course of which unanimous objections to the income tax proposals were voiced by all the Unofficials.
In the meantime the Income Tax Bill had been referred to the Income Tax Committee, of which I was a member, and which held its first meeting on the 3rd November, 1939.
As the result of the recommendations of this Committee the original income tax proposals were dropped, and in lieu thereof a Bill was introduced in this Council, which became the War Revenue Ordinance No. 13 of 1940.
In the Budget Debates above referred to I made it clear that my main objection was that, for a place like Hong Kong, with its chief characteristics as an entrepot, and with a transitory population, any measure of the complexity and intricacy inherent in income tax legislation, cannot be equitably administered in the Colony, at all events for many years after its introduction. That was why, in my view, the Income Tax Bill, even with a standard rate of ten per cent., was not acceptable, whereas the War Revenue Ordinance No. 13 of 1940 received the unanimous support of all the Unofficials.
As regards the proposals embodied in this Ordinance to which I had made some personal contribution, I ventured the following remarks when I addressed this Council on the 14th March, 1940:-
On December 4th, 1939, Mr. Caine, in view of his impending 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 basis and at rates calculated to impose very broadly the same degree of sacrifice on the several classes of persons affected. Such a combination of taxes 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 liability to pay. In particular much of the enquiry into personal circumstances which is apprehended from the administration of income tax should be avoided.'"' (1940 Hansard, page 29).
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