CO129-525-3 Estimates 1931 and other financial papers 16-1-1930 - 1-9-1932 — Page 81

HONG KONG LEGISLATIVE COUNCIL.

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a 2 per cent. improvement rate, but, of course, this is earmarked for special purposes. The revised figure for Hong Kong of 17 per cent. inclusive compares, therefore, very favourably with this class of taxation in Malaya. I confess that I had made up my mind that it should not be raised by more than 3 per cent., and steadily resisted sugestions to adopt a greater rise. After combing the estimates very carefully, however, I was forced to the conclusion that, if any lower rate were imposed, the deficit on next year's working would be higher than is justified, and I reluctantly came to the conclusion that a 4 per cent. rise was necessary. Before deciding on this increase I explored other possible sources of revenue, but there appeared to be none which would produce the necessary amount required, or the incidence of which would be equally equitable.

Alternative Taxation.

The difficulty of finding a more equitable form may be gathered from the unofficial reports of the recent meeting of the General Committee of the Chinese General Chamber of Commerce. Three sources were recommended: a tax on betting: this has some merit and need not be irrevocably turned down, but I think that it is advisable to see the effect of it in England. In any event 20 per cent., would kill it and a reasonable percentage would not bring a huge amount. Meanwhile, the amusements tax will be applied to racing clubs. I consider that the proposed tax on jewellery would be almost impossible to enforce and any attempt to do so would in my opinion be doomed to failure. The proposal regarding buses and ferries entails the raising of the cost of essential services, so also raising the cost of living. It must be remembered that we tax seats in buses and if the services were let for tender, this would have to be taken into account. In a Colony where there is no income tax, assessment seems a fair form of taxation. In this connexion, it must be remembered that the military contribution is high, and that of the 4 per cent. additional rate, we only actually receive 3.2 per cent. directly for revenue purposes.

Military Contribution.

As regards the military contribution it has been suggested that we should try to get the percentage reduced. Efforts have been made in the past to get a revision but with little success and I may say at once that in my opinion there is not the slightest chance of inducing the stony hearted Home Treasury to agree to any material reduction. I may remind you that we only pay 20 per cent. so long as the cost of the garrison costs more than that. It must also be remembered that the cost is almost entirely on a sterling basis and that the sterling value of our contribution is adversely affected by the low dollar. The reply to the question of the profit on exchange is that the matter is still under consideration. Meanwhile favourable consideration has been given to the suggestion that capital expenditure on certain under- takings should be taken into account with a view to exemptions.

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