1939-11-09 — Page 14

,

THE CHINA MAIL, NOVEMBER 9, 1939

MR. DODWELL ON THE OBJECTIONS

(Continued from Page 13)

in other countries.

in

One realises

|chase of all Colonial supplies through | We attached little importance to the tion costs.

ASTRONOMICAL COSTS one central organization is an econo- danger of industrial enterprise being

More than one unofficial member mic and businesslike procedure, and driven away from the Colony, for the We are being constantly told that one which is adopted by all business simple reason that most of it derives has in past years called these figures In considerable benefit from Imperial astronomical, and the epithet is more income tax has failed' in this country concerns with branches abroad. or that. All I can say is that many respects I agree that this an- Preference, but we came to the unan- apt to-day than ever. those British countries where it exists swer is unanswerable, and I am quite imous conclusion that the risk of a that with a growing colony must of my opposition flight of capital was a very real one necessity come a certain increase in to-day, that is not the official view, propared to withdraw and there has been a steady increase to the policy, if only the Government which should not be taken if our war in the number of countries in which would be businesslike in all directions. contribution could income tax exists and in the reliance Some radical change in regard to the some other way. which is placed upon it in those coun-three disabilities I have mentioned tries as one of the most important seems essential, and would so increase services the efficiency of the whole that substantial reductions in staff and overhead would result.

sources of revenue.

OTHER TAXES

tobacco

say

our

be collected in

different

•

In

I

administration and the personnel of consequently in its cost. The objec- officers, tion lies not to this but rather to the fact that in recruiting its Government does not give the Hong Kong man the chance he deserves. had occasion last year to complain that local men were not employed in the service as much as they should be. If reform in that direction was de- sirable then, its need to-day is more of fairness to the community and of evident than ever, on the score both Government keeping down expense. might well consider also the payment on a dollar basis of those of its junior officers who are engaged locally and

dollars.

In their case there is no justifica- to tion for an automatic transfer sterling when they have proved satis- factory. and

In our position as a storage, distri- buting, and financing centre, with no mineral or agricultural wealth to speak

on an entirely of, we are footing to Ceylon and other Crown Colonies which have introduced In VEXED QUESTION }

Our trade is very large- There is only one other thing which

With regard to this much vexed come Tax.

it has suffered strikes me in this talk of evasion it is notorious that other taxes are question of Income Tax, I have lis-ly dependent upon cheap money. evaded to a greater or less extent: tened with great interest to my Un-my own experience

and official colleagues' remarks, and to the very seriously on many occasions be- e.g. import duties on liquor are certainly not 100% effec- very able reply of the Honourable fore from flights of capital, when in- tive, and from time to time Govern-Financial Secretary who, in spite of terest rates have risen to 7% and 8% ment is obliged to institute prosecu- the disabilities surrounding the trans- and seriously affected all industry and the fer of staff that I have just alluded to, trade. In the light of the strenuous our Chinese colleagues tlons for failure to pay, stamp duties or wireless licences. It has in some miraculous way arrived opposition of

I personally feel that it might be a does not occur to anybody, however, here, and if I may say so, is most ef- who fear that it will have this effect, I who, while on probation, are paid in

He is now quite rightly dangerous experiment.

MAY DISAPPEAR to suggest that these taxes should be ficiently carrying out the duties of a

This may seen strange advice from abolished because they are not quite new broom. 100% effective, and if the sugges-bent upon sweeping up part of

the one whose Company is registered at tion is made in the case of income hard-earned salaries in order to de-

greatest of all causes, but he proposes Home, pays Home Income Tax tax I cannot but suspect that it covers vote them to the prosecution of some other motive.

A good deal has been made of the to use a type of broom that some of Excess Profits Tax, and on this

during the last war. Nevertheless, it alleged enormous expenditure on the us don't consider suited to the inter-count was at a serious disadvantage world to-day, and the amenities of

is my considered opinion unless collection of income tax. The closest ests of the Colony.

should As one of the business men origin- can get over the Chinese objections.

none of us estimate of cost we can now make is something between 3 and 4 lakhs ally consulted with regard to the im-I recognize that per annum, practically all of which, position of Income Tax, I would say rightly pass final judgment upon the re- at once that my opposition to it did subject until the Bill is before us and of course. will be for the staff

The Committee now sitting may quired. This is in the first place a

serious objections on the part of the

succeed in devising some method very small percentage of the expected not arise until I later discovered the we know its terms.

who represent It will, moreover, in present Chinese community, yield.

of making it less objectionable to our friends. Under their terms of circumtances be only to a small ex-such a large proportion of our popula-

new staff since

tion.

reference it is difficult to see how tent expenditure on

this can be achieved, but if it can, we expect to draw the majority of

then the main objection I have to the staff required from other bran-

Income Tax will disappear. ches of the Government service whose activities will have to be reduced to some extent and whose leave is, un- der

arrangements, being present

SO increasing drastically curtailed, the number of available officers.

PRIVATE

.of

COSTS

(The Hon. Mr. Sydney Caine's Speech is continued in Page 21).

A BUSINESS MAN'S POSITION

CHINESE OBJECTION

I was also a little misled by the fact that my Honourable friend, Tax Mr. M. K. Lo, signed the

which in Commission's report,

remarks spite of its qualifying about Income Tax, I should hard. to do in ly have expected him face of the very decided views he now expresses,

mur.

ac-

we

4

patriotic, no doubt particularly so to my Honourable friend the Acting General Officer Commanding, and the

who pay

their Services generally, 7/6d.

the

AMENITIES OF COLONY Conditions are such all over life in Hong Kong are so much greater than they were say thirty years ago, that such a policy would not result, as might be feared, in discouraging the right type of young man from joining. I am confident that on this much more economical basis, which would mean a saving both in actual pay and in passages, there would still be eager seekers after posts from the ranks of those who have spent their youth here and are the product of our local schools.

INCOME TAX

THREE REASONS

Be-

the

as

COST OF COLLECTION

So much for our ordinary Budget. There is another point which needs On the subject of the War Budget I serious consideration before setting upam, like the rest of my unofficial col- an expensive collection department,leagues, strongly opposed to the pro- which, if it is to do its work thorough- posed taxation of incomes for rea-

cost

sons which I shall give later. I am at one with the Financial Se-ly I fear will almost certainly

that more than the 4 lakhs mentioned by fore doing so, however, let me make tax will cretary in repudiating that idea It is objected that the

arise objections do not cause a great deal of extra private the Colony's trade has suffered dur- the Hon. Financial Secretary. I doubt it clear that, as in the case of my col-

It has been if the Government really appreciates leagues, my

from self-interest.. expenditure particularly in the keeping the last two years.

prosperous, but is how large a proportion of the tax, if of applied throughout the Calony, would

Nor are they voiced on behalf of ing of accounts and preparation of quite abnormally returns. The ordinary man will not now showing very distinct signs.

the dwindling. During the last war, Hong have to be refunded by the Home the Portuguese community. From the I estimate that six large personal standpoint, indeed, few mea- need any expert assistance in

sures could be more welcome-it is preparation of his returns unless he Kong's trade benefited rather than the Government.

taxation. The reverse, but to-day there is so much British concerns, apart from the pure-

and ly local limited companies, would con- obvious that the legal profession stands is seeking to avoid

much tribute a very substantial proportion officials of any income tax depart-Government control of imports

to gain considerably from its intro- from European the principles of the exports and exchange, not as

probably coming ment run on

chartered accountants as British income tax administration will here as in other parts of the world, of the tax collected

quite and so much uncertainty about the British companies, and the great ma- duction, lawyers

of persons whose assistance must be perfectly willing to give honestly any advice which may be effects of the Sino-Japanese conflict,jority of their shareholders are in the next after

In these Finally, Sir, I realise only too well necessity be invoked by the taxpayer, required by the individual as regards that it is impossible to form a reliable United Kingdom.

Were I actuated by selfishness, the allowances to which he is en-opinion about the future. titled. As to business firms the ex-circumstances, I feel that it is an un-that opposition to Income Tax at the whether he be willing or loth to pay. therefore, I would urge its immediate tra expenses would be small except propitious moment to embark upon a present moment sounds extremely un-

which do doubtful experiment. firms

adoption. As for my community, so in the case

at

BURGLAR REFERENCE accounts not

keep any now

The Financial Secretary has alluded

far as I can judge from a preliminary- examination of the draft bill, the scale to the success which has attended the

upon which it is proposed to base the other imposition of Income Tax in

BRITONS' ATTITUDE

tax, together with the numerous al- be that few will places, and particularly mentioned the

So far as the European Britons in lowances, ensures

hard hit, apart altogether from Dutch East Indies, where the Chinese are apparently paying up without de- the Colony are concerned, I am con-

His reference to burglars re-fident that they are fully prepared to fact that we desire, as does everyone minds me of the well-known incident accept their responsibility in this mat- who has enjoyed the protection of the ter and that all would gladly make English flag and the privileges of liv-

the Empire, to help The Hon. Mr. S. H. Dodwell said: that occurred not so many years ago, Though the Budget before us to of the wealthy Chinese merchants in their contribution through the medium ing within day is a heavy one considering the Java who for years had been getting of an Income Tax, provided that rea-

I object to this proposed tax, Sir, world situation, the explanations giv-away with a return of 10,000 guilders sonable allowances are made, and that much as we can in this War.

From what my Chinese colleagues for three reasons. The first is the at- en to the Select Committee have sa- a year, when his income was probably the tax is for the duration of the war. tisfied me that it would be false eco-in the region of a million. The tax

tendant danger, already mentioned, of nomy not to proceed with the Public collection department at last in des- have said, it is clearly not the Works Extraordinary programme, un-peration raided his office and seized ment of the contribution to

While not convinced that this is the less our revenue shows signs of a ser all his books. He promptly engaged they object, but to the method of its the flight of capital from this Colony. ious decline. Should this occur, the an adept burglar, who stole the books collection.

Conceivably of course the danger of inevitable result of income tax, I am contingency is satisfactorily covered by from the collector's office and burnt

We undoubtedly ger well within the bounds of possi- the assurance we have received that them. He then sued the Government a flight of capital may prove an ex-nevertheless certain that it is a dan- certain of those works will not be for the loss of the books and obtain-aggerated bogey.

have a magnificent harbour and many bility, and once this is admitted, and commenced without further reference ed damages,

attractions and facilities to counteract it cannot be denied, then there can be in- the imposition of the tax, but from no question but that a measure to the Finance Committee.

howvolving this risk is one that should be my thirty years' experience of little it takes to upset the delicate resorted to only when all other means economic equilibrium of this Colony, of raising money have been tried and I am convinced that there is a grave found wanting. element of risk, and that in view I would like now to contradict the the difficulties of trading we are like- renders it almost impossible to dis-impression which seems to be circulat-ly to have to contend with, it some

and ing in the Colony that the Committee we should not take unless the

can make the miss an unsatisfactory servant,

of Commerce, of mittee now in session which adheres tenaciously to the prac of the Chamber tice of promotion by seniority, is bad which I am one, was neither in fav- Bill palatable to the Chinese

munity. enough, but when to this is added the our of making any contribution to the Inequality of the terms of service in Imperial War Chest, nor of paying In- the different Colonies, which renders come Tax themselves. Nothing could most difficult the very desirable trans- be further from the truth. The Com- fer of staff from one Colony to an-mittee was unanimously in favour of

The Hon. Mr. Leo d'Almada said: other, the Government in my judg- a substantial contribution, their share ment is saddled with three disabili of which they have no desire nor in- In view of present circumstances I do ties which would speedily ruin any tention to evade. Only two consider not propose to criticise the Colony's ationis weigh with the Committee: ordinary budget insofar as its public ordinary business concern.

SUPPLY PURCHASES

firstly, will the introduction of Income works expenditure is concerned, be- As Your Excellency is possibly Tax drive: Chinese industrial enter- aware, I have protested before now in prise and capital away from the Co cause at a time like this, when, as I this Council against the Government's lony and prevent fresh capital and believe, economy should be the watch- policy of purchasing practically all industries coming to it, and secondly, their supplies through the Crown will not the organization for collect

A fewer Agents for the Colonies, and very ing it

ZONAMBERG VIEWS little through the local merchants-

The Committer muawer stoʻnboth carry on the Colony's trade. The Government's reply is that the pur-these questims: was in the atti

At the same time, it is impossible not to be alarmed at the ever-increas- ing cost of Government, which in my un- view must continue to increase

the less there is a radical change in

down for conducting principles laid the Colonial service. A system which

who

That however may be an iso- of lated case, and In the event Income Tax being introduced, I hope my honourable friend will not have to resort to such drastic measures.

A CONTRADICTION

pay-

which

of

Com-

THE PORTUGUESE COMMUNITY

com-

one word, whatever disappointment may feel over the programme of pu- blic works, must be borne in silence. But for the same reason. I would be falling in my dut were 1 to pass over Agures connected with administra-

That this is far from the case is obvious from the numerous alterna-

tives suggested to Government by re- presentative and responsible bodies in this Colony, by the press, and by in-- dividuals sufficiently alarmed at the prospect to have filled the correspon- dence columns of more than one local paper during the last few weeks. It must be remembered, as has been mentioned more than once since this tax was first mooted, that it is not being imposed on a colony enjoying a period of normal commercial pros- perity.

ARTIFICIAL PROSPERITY .. The "prosperity," If so it may be called, of the last two years or so, has been artificially brought about, and no one would care to predict its contin- time. Our uance for any length of t outlook is, at best, uncertain, and the (Continued on Paso (15)