1939-11-16 — Page 11

66

THE CHINA MAIL, NOVEMBER 16, 1939

NOT IMPRESSED

ARGUMENT"

(Continued from Page 4)

Hong Kong which has built up its Importance as a trading and financial centre on the principle of freedom from Government restrictions upon the individual trader and his financial | (2) operations. The confidence thus crent- ed is essential to the prosperity of the Colony. There is real danger that a method of taxation ill-adapted to the special position of Hong Kong will destroy that confidence and seriously damage a delicate financial structure. PORT FACILITIES

I would repeat again, Sir, it is of vital and paramount importance that the facilities of this Port be kept as free and cheap as possible.

The Introduction of any mea- aures that may endanger these facilities or become a means of restricting the movement of Its Chinese traders will have the most disastrous effects. Trade driven from this Colony to com- petitors, who are only too anxious to obtain a share of our trade, will be extremely difficult to re-

cover.

I am satisfied that suitable alter- natives can be found for the object we all have in mind, and I associate myself with the Honourable Member who represents the Chamber of Com- merce in his suggestion, that the Ex- pert Committee now examining the Bill be given wider terms of reference.

There seems to be abroad in some circles a feeling that the British Com- munity is unwilling to shoulder its prover responsibilities. I desire to associate myself with the remark made by the Hon. Mr. S. H. Dodwell in this regard. There is no reluc- tance, as far as I am aware, to take our share in wartime resnonsibility of the Empire, but I do most strongly feel that the financial and commer- cial interests of the Colony and therefore its future prosperity will be adversely affected by the introduction of a lever in the form of the proposed Income Tax.

MR. LI TSE-FONG'S

SPEECH

The Hon. Mr. Li Tse-fong criticised the lack of provision for model verna- cular primary schools, quoting. Mr. Burney: "It is evident that the Gov. ernment's expenditure on Higher (including Secondary) Education, is out of proportion to its expenditure on primary education," urged the con- struction of small underground A.R.P. shelters for civilians who may be in the open in time of emergency, and declared that the imposition of Income Tax at the present juncture may in- flict such damage to the vital interests of the Colony that it may not be able for a long time to regain its impor-

tance.

He continued:

No one who has listened to or read the Financial Secretary's speech of the 9th November could possibly fail to appreciate its brilliance as a debating effort. But if I may say so, his speech upon a close analysis is not covincing because it fails to deal adequately with the fundamental objection to the tax, namely, its effect on the Colony; and because it is devoted largely to an argument as to the absence or presence of administrative difficulties. $1,000,000 DAILY

The Honourable the Financial Secretary appears to have overlooked two very important observations of the Taxation Committee which, briefly summarised, are as follows: (1) That the possibility of the suc-

SOUTH AFRICA'S GIFT TO FUND

London, To-day. Mr. Waterson, High Commissioner for South Africa, yesterday presented the Lord Mayor of London with a cheque for £20,000 for his Red Cross fund.

The South African Red Cross, which gave the money, desires it to be used for the purchase of four motor am- bulances, to be named after the pro vinces of Transyaal, Cape, of Good Hope, Natal and Orange Free State Reuter.

i

BY

cessful working of the tax should first be the subject of a detailed Investigation with the assistance of an expert preferably familiar with the collection of the tax in an eastern country,

That it would be unwise to im- pose a tax of this nature until a substantial body of opinion in this Colony believes that the tax can be levied fairly and efficient- ly.

The Hon. Mr. Caine stresses the point that because the exchange rate of the Hong Kong dollar has been stable for the last few weeks at about the highest limit permitted under the stabilization scheme, there has been no substantial outward move- ment of capital. It is well known that the exchange rate of the Hong Kong dollar is subject to fluctuation caused by many factors which I need not enumerate, and I do not think that it can be taken as any evidence indicating the movement of capital, In this connection I need only point out that the exchange rate of our dollar in terms of the Chinese dollar has depreciated quite substantially since the 12th October.

I have no actual figures available believe that but I have reason to since Income Tax was mooted, the currency notes amount of Chinese

the that have been shipped out of Colony has been on the average of about a million dollars a day which constitutes a heavy inroad

the floating capital of the Colony. In addition there is that invisible flight of capital through transactions in sterling operated between here and other financial centres.

on

The Honourable the Financial Se- cretary was somewhat caustic in his criticism of arguments advanced against the imposition of Income Tax, because of the difficulties of adminis- tration, and he saw. flt to set his knowledge against that of the Hon- ourable Senior Chinese unofficial member as to how Chinese accounts are kept. I am sure that my Senior Chinese Colleague did not intend to weave a net of mystery about Chin- ese accounting as if he were trying to defend it in that way. It is funda- mentally different in a manner that it is not easy to describe. Those, who have occasionally to construe it, as for instance in the courts of law or in bankruptcy, know how difficult it is to reconcile it with modern, ac- counting methods,

COMPLEX SYSTEM

There is one asnect with which the Honourable the Financial Secretary has not dealt adequately and which should be weighed strongly against Income Tax as a temporary war measure. I refer to the matter of As Income Tax is in organisation. reality a complex system of taxation, the organisation of the new adminis- trative forces for its collection will require a good deal of time and the normal revenue-yielding power will months or only be reached many nerhaps years after its enactment. By the time the new machinary is in ended or be near its end. working order the war may have The more I think of this aspect of the ques- understand tion, the more I fail to why Government should choose In-

com Tax to finance the war budget.

With reference to Mr. Caine's ob- servation that the Chinese members

have made no specific suggestions for alternative taxes I would like to point out that in his sneech the Hon-

Unofficial ourable Senior

Member made it quite clear that he was speaking with the unanimous support of all the Unofficial Members when he aked Government for the ap- pointment of a committee to consider and make recommendation for suit- able alternatives. My Chinese Col- league and I have therefore decided not to make separate suggestion in that regard.

I will now close by paving a tribute to the Honourable the Financial Se- cretary for the public spirit and un- in the selfish sentiment expressed

speech. To final ngragranh of his meet his laudable wish I think that easily devise A Government can scheme whereby all Government

servants whose salaries reach certain figure should be subiected to a special levy as a war contribution.

If Government were to adant such a scheme I feel sure the Public will submit to readily and cheerfully

while sem alternative taxes which. enpbling us to make а substantial contribution to the Imperial Govern- ment, would, not be infurious to the Colony as would be the introduction of Income Tax.

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