1939-11-09 — Page 11

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THE CHINA MAIL, NOVEMBER 9, 1939

CHINESE BUSINESS MEN'S SECRETS

THE CHINESE VIEWPOINT

The Hon. Mr. T. N. Chau said:-AS the draft estimates of expenditure for 1940/41 have been carefully consider- ed by the Select Committee, I person- ally have no observations to make on the ordinary budget.

BANK SOURCES

ele-

(Continued from Page 10))

ly or predominently Chinese commun- A percentage on every gas bill.

In spite of marked and, we hope, disturbance of the calculations and ity has always proved a failure and permanent industrialisation which has estimates which have preceded these A percentage on every telephone bill. as, obviously, there is a reason for this been noted in recent years, the found-wartime investments will undoubtedly A raising of the annual licence fee which might be easily ascertained or, ation of the Colony's business is still involve a consideration of alternatives

charged for wireless sets.

on the other hand, evade the most vigi- the merchant through whom political when it should, of course, be our object' A tax on cinema and theatre tickets. lant inquiry, it is my view that with- business flows from the outside world to retain the advantages which The Institution of a special War sur-out an answer to this question, an an- to and from the mainland.

this tax on the assessed rateable swer which would enable us to distin-

Colony so sorely needed. SEPARATE COMPARTMENTS value of property.

guish conditions in this Colony, from

I endorse the remark made by the The collection of a percentage on di- countries where the experiment has cellency that the book-keeping for the the unanimous opinion of the Commit- I need perhaps not remind Your Ex-Hon. Senior Unofficial Member that vidends from Investments in failed, we are not justified in proceed-average Chinese merchant is divided tee and Members of the Hong Kong Public Limited Companies in ing with the matter.

into two very separate compartments. Chinese General Chamber of Com- Hong Konn.

It is known with what little success There is the general recording NEW COMMITTEE PROPOSED the attempt to introduce Income Tax transactions with the world at large income tax in this Colony. A copy of of merce is adverse to the institution of On behalf of all the Unofficial Mem in Malaya has met, but what is still which is dealt with by the employees the Chamber's letter has been sent to bers of this Council I desire to state more important is the evidence from of what is known as "the outer count-Government through the Hon. Secre- that Income Tax is, in our opinion. China itself where the Income Tax er", but there is an additional set of tary for Chinese Affairs. detrimental to the future of this Co- Laws, which had been most carefully books which are kept in "the inner lony, and to request Your Excellency worked out, have proved to be an ab-counter" by the proprietor or partners assurance that the responsible

I will conclude, as I began, with an to appoint a Committee to consider solute failure almost from the time of the business maintained under con-ments of the Chinese community are and report on alternatives to Income of their institution.

ditions of extreme privacy, to which prepared to assist in every way they Tax, for the special purpose of rais-

I do not think it necessary for me to no employees have access under any can in finding a solution to the urgent ing revenue for the War Gift to the failures, but I do repeat that a very

put forward any theories for these circumstances. Imperial Government.

and special financial problems with We must try to realise that an off-which the Colony is faced, It is my earnest hope that a justing point and not an incidental matter means to a Chinese business man a clear explanation should be the start-cial invasion of the "inner. counter" and wise solution of this

FIRM CONVICTION problem may be found and that what

taxation for our own deliberations.

Numerous methods of raising re- great deal more than the disclosure venue alternative to Income Tax have ought to be a free-will offering from

of his business secrets. this Colony will go Home with the

NOTE OF CAUTION

To under- already been suggested, and in their The Taxation Committee appointed this privacy, which is traditional, has community desires to be not critical

stand this we should appreciate that consideration cordial and united assent of

the Chinese business every by Your Excellency in October, 1938, no origin in any attempt Member of, this Council.

had already, as I will admit, a back-taxation or to mislead official inquiry, attacked on the ground that it inflicts to evade but constructive. No scheme will be ground of very abnormal conditions It is not a question merely of disclo~ hardship or strain on any portion of in this Colony, arising out of the Sino- sure of business secrets, of sources of the community. But the opposition Japanese hostilities which had then supply or of customers, but of the to the institution of anything in the been in progress for over a year.

That part of their

breaking down of a traditional ele-nature of a tax on income or profits, deals with Income Tax cannot, there- been regarded for centuries as a fund- arises mainly from the firm conviction Report whichment in business procedure which has which I now have formally to record, fore, be said to have ignored entirely amental form of security, and with it that the disturbing effect of its intro- the unusual commercial and financial would go a degree of confidence which duction and the confusion attendant situation which then existed and might might undermine the whole structure on its administration will, by continue for an indefinite period. As regards the war budget, it is first

of business life.

doing It is, however, worthy of note that

incalculable harm to business interests, of all my duty to the Chinese commun-in furnishing replies to a number of

defeat the object which it is obviously ity to dispel any impression which practical difficulties in the institution would depend only in part on the in-

It may be said that the assessments the desire of the Government to attain. may have got abroad that the motive of Income Tax relating to questions [vestigations of books, and that there behind any opposition that has been which the Committee itself had raised, are considerable sources from which

FIGURES BY MR. publicly or privately expressed to the a very strong note of caution institution of a tax on income reflects sounded, and I desire to refer parti-is available. These

was reliable and indisputable information

M. K. LO any reluctance to raise a special capi-cularly to certain preliminary

include tal contribution to the War Funds of conditional recommendations.

income and from public investments, public

The Hon. Mr. M. K. Lo said:-My! or Honourable the Imperial Government.

friend, the private companies, from house pro- Secretary, in his illuminating. "Memo- Financial The sug-

These include the absolute necessity perties, mortgages, salaries, (which are randum on the Financial Position 1938, gestion that the comments or even

for a detailed investigation of criticism, however strong, might be whole field with the assistance of an all income which

the a matter of record by employers), and 1939 and the Estimates for 1940-1941", construed as revealing any general at- "expert", and to this I would person-abroad and which passes through re- again, remarks:

is remitted from to which I shall have occasion to refer titude of 'antagonism by the Chinese, ally add the maintenance of numerous cognized channels such as Banks. fortunately comes from a source which experts, far beyond the we have all learnt to regard as com-

preliminary or introductory stages.

Whilst not agreeing that the propor-1940-1941 has been estimated general- "As last year, the revenue for mitted, as a matter of policy, to sys-

the Committee recommended that the ticipated, the ability to tax that source activity of the Colony will be main- And further, tion of these sources is as large as an-ly on the assumption that the economic tematic distortion.

imposition of this form of Tax should does not, unless I misunderstand the tained at not far short of its present be preceded by the formation of As representing the Chinese com-large and substantial body of favour-There arise numerous questions of re-timistic, especially since the outbreak a situation, provide any encouragement. | level. This may prove to be over op- munity, and by that I mean not only able opinion in this Colony. those whose loyalty arises from their

funds, rebates and allowances which of the war, but the whole outlook is British birth but all who have enjoyed

CHINESE AND TAX

will have to be considered, as in the at present so uncertain that no other for either longer or shorter

The experts whose reports I should vast majority of cases such class periods like to hear before this matter pro-income will not represent the

of firm basis for estimating the revenue the privileges of citizenship in Colony, I have to refute in the most

sole presents itself." this ceeds any further, are not those who sources.

can assure us how successfully Income the case of foreign

With the inevitable dislocations of unequivocal terms that such

In this Colony, except perhaps in trade caused by the war, and by the opposi- Tax works in other communities, but tion, as has already been voiced

employees, stances must be comparatively

in- various measures dictated by Imperial against the introduction of income tax,

why it has failed amongst Chinese 'is associated with any

few war economy, and with new taxation As for those who would where income is derived merely from under the proposed War Budget, I communities. unwillingness be responsible for administration to share in full measure whatever sa- Income Tax they would all have to be invariably thrown back, for the pur-Financial Secretary's fear that the as-

a single source. of

We are, therefore, confess to a strong feeling that crifices which are being claimed from persons with expert training and much pose of assessment not only of income sumption on which the revenue posi- all citizens of the British Empire. I go further and say that far from the

but of allowances, to investigate each tion is based may be over optimistic adoption of any hesitant attitude to- and permanent assistance

The hope of obtaining such advice individual case.

will, unhappily, prove only too true. wards the raising of a special war under existing conditions, appear at all does not,

THE MIDDLE MAN contribution by this Colony, it is the bright. The alternative of procuring large proportion of the business trans-the Council, I have paid due regard

As an example of one class of dif-senting, as a member of the

I wish, therefore, to state that, in as- ficulty, I am reminded of the

Select general desire of the Chinese commun-officials who have to gain their

very Committee, to the Budget now before ity to see that in due course such contribution be made and in a manner working of the system, which should as the "middle man" or

perience at the expense of the smooth acted in this Colony by what is known to the Financial Secretary's statement which will be worthy of and do credit be guaranteed from its initiation, is a agent, the person who buys and sells 1939 that the programme of Public commission in this Council on the 12th October, to the loyalty of all sections of the sure way of maintaining its unpopu- not for his own account but community of this Colony.

larity,

money after making certain recognis-many Items of special expenditure ap- passes Works Extraordinary and also the I am convinced that the majority of

ed deductions. I would be surprised pearing in the individual Heads The Chinese community is far from the Chinese community believe that it to hear that the total income from Estimates, although approved by this being insensible of the urgent and will never be possible to approach that this class of business could be ascer- Council and the Secretary of State, special financial needs of the Colony, stage at which the incidence of

thetained, with an approximation to ac- would not be automatically and they realise that these call for Tax falls fairly and equitably amongst curacy, by inspecting all transactions out if the revenue position did consideration of new methods of rais-those who should contribute their involved and the records kept by the justify the expenditure. ing revenue.

more or less towards it. In the Chi-principals in such transaction. In a The opposition to the introduction nese business community the concep- large number of cases, neither of the of Income Tax which it is my duty to tion of profits on investment differs principals carries on business in this The above, Sir, is all that I have to emphasise, is based on the firm con- fundamentally from that which is es- Colony. Whilst on this question say on the General Budget, except to viction that its practical implication is sential for the assessment of the Tax. commission, it must be well known made by me in the last two successive renew a plea which has already been so fraught with difficulties, that it will I am aware that, there is an increas- that in each business, and indeed in Budget Debates in this Council. The not only fail in its object but

ing proportion of Chinese book-keep- many private transactions, there are plea, Sir, is that Government may be may bring in its train repercussions anding which approaches European me- recognised deductions which are not complications in spheres which might thods, but the bulk of Chinese business, a matter of record but are, neverthe-kind enough to make a substantial not normally be associated with the whether connected with production or less, an essential.

grant for providing. charitable and collection of revenue.

industry or with that preponderance

It would be interesting to know to count of the Sino-Japanese conflict.

medical relief to the Chinese on ac- Were the difficulties with which we which may be described as general what extent the preliminary essentials are faced only of a practical nature I trading, adheres to the systems which, and qualifications made by the Taxa-such relief is in a humanitarian cause

As I have previously pointed

out, would consider any form of opposi- although taking care of the specific tion Committee would have been aug-which transcends any consideration of profits on output or sales, do not take mented emphasised had it been cognizance of general profits on enter- asked to report on this particular sub-mere "profit and loss". But, soeaking ject under the conditions imposed on 1938, I was able to show, on the high in this Council on the 13th October, this Colony through being ftself in-authority of the Financial Secretary,

"UNEQUIVOCAL"

CHINESE ATTITUDE

a

experience.

ULTIMATE DEFEAT

ex-

it.

or

of

PLEA FOR CHARITY

the

of

carried not

tion which did not attempt to offer any solution as being inadequate, but as I am convinced that this revolu-prise. tionary method of raising revenue in this Colony is going to place us in a In unincorporated partnership is is- volved in a state of war. I venture that in respect of 1937 the revenue position where not merely the pros-sued a combined Balance Sheet and to surmise that what little encourage- benefited to the extent of over $4,400, perity but the whole financial struc-Income Tax and Expenditure Account ment that Repoft may have given to 000. by the Sino-Japanese conflict.

the Government for the introduction ture may be imperilled, I must depre-in which what is considered as the cate even prolonged considerations capital may be increased or decreased of the measure now, would have been Since then very striking figures have directed towards solving the var-but in which the "profits for distribu- replaced by a solemn warning against been revealed by the Financial Secre-

of' tion” as süch, are not shown. ious practical difficulties, many

tary's Memorandum, to which I have which have been already voiced by To those who claim that the in-

REFUGEE CAPITAL

already referred. public bodies and in the Press.

formation required for

Attention has. assessments

been sufficiently Taking, first, 1938: When the. Es- may nevertheless be easily extracted, drawn to the transitory and migratory timate for Revenue was first framed, I feel that in considering the ques- and to those who maintain that a par-nature of the capital refugee capital, Revenue was put at just over 30 tion of Income Tax in this Colony,tial transition from the present me if I may so describe it which has million. The actual revenue exceed- where the Chinese business population thods has been envisaged, I would found its way to this Colony in the lasted this estimate by 38,480,985.00, and predominates, we should exercise a make the same reply, namely, that all two years. Investment and enterprise, this excess is attributed by the Finan- sense, not merely of scientific but more who are qualified to speak in such including the transfer of manufactur➡cial Secretary Mo the increase in the- particularly of what I might describe matters deny that such transformation ing plant to Hong Kong, has been any of the as "psychological" economics. We are appears feasible, except perhaps at the stimulated by a profound sense of se“ faced by the undeniable fact that the expense of much confusion and ultim-curity and by satisfactory introduction of Income Tax in a whol- ate defeat.

'ment of the benefits to be der

“PSYCHOLOGICAL"