80
54307/47
Dear Serpell,
Colonial office,
Downing Street,
S.W.1.
26 June, 1947.
20
Ansd. (26).
I enclose a copy of a despatch from Hong Kong regarding the "Income Tax" Ordinance which came into force on 1st pril last. I do not trouble you with the enclosures to the despatch including the Ordinance itself, a copy of which we are sending to the Inland Kevenue for their comments. I think the Hong Kong Administration are to be congratulated on the fact that, in spite of very considerable earlier opposition the Bill was finally passed without the use of the Official majority, with four unofficials (including one Chinese) out of a total of seven unofficials voting in its favour.
2. In accepting the various modifications Sir M. Young had in mind not only the necessity of avoiding undue hardship in the Colony's present circumstances, but also that the essential thing at this stage is to establish machinery of direct taxation, and secure the necessary measure of suport for it in principle, since it is not to be expected that subsequent adjust- ments will present the same order of difficulty. The present guess is that, in spite of the various concessions made, the total yield for the current year will be in the neighbourhood of $16,000,000. The fact is of course that the potential revenue to be derived from the direct taxation will be nothing like fully tapped in the current year. Our telegram of 26th January emphasised the importance we attached to putting the standard rate at as high a level as the Governor considered practicable. The standard rate of tax originally contemplated was 25 but this
/was
R. SERPELL, ES3, 0.B. E.