C
HONG KONG LEGISLATIVE COUNCIL.
143
me take the war budget first. To it will be credited the whole proceeds of income tax. Those proceeds will be used, first, to meet the costs of collection of income tax; secondly, to pay for the expenditure on local defence now appearing in Heads 6A, 6B and 6C, that is, the Volunteer Defence Corps, the Naval Volunteer Force and the Air Raid Precautions Department; thirdly to meet the additional expenses in various directions necessitated by new services created to meet war time necessities, e.g. maintenance of German internees, censorship services, etc. The whole balance of the proceeds will be made available as a special war contribution to His Majesty's Government, to be spent as they think fit, locally or at home. This will be entirely additional to the ordinary Defence Contribution of $6,000,000 per annum which The new will continue to be a charge on the ordinary budget. expenditure on the Income Tax Department and on special war expenditure will of course be duly authorized by this Council and estimates for those purposes will be submitted as soon as they can be prepared. Members will naturally want to know how this is expected to work out in figures. We are proposing a standard rate of Income Tax of 10%, with a possible surtax on very high incomes. I will explain later more of the detail, but the yield at 10% was I put by the Taxation Committee at about $10,000,000 per annum. can at present give no reliable estimate of the costs of administration but they are likely to be only a small percentage. The local defence and war expenses are not likely to aggregate more than $2,000,000 per annum and the balance payable to His Majesty's Government should be of the order of $7,000,000 or $8,000,000. I do beg, however, that nobody will hold these figures against me if they turn out wrong. There are no statistics whatever of total incomes in the Colony and we are compelled to do a lot of guesswork at this stage.
Turning to the ordinary budget, we must reckon with increases in expenditure in many services not directly connected with the war. All supplies, for instance, are likely to cost more; unfortunately as we are so dependent on imports we can do very little to prevent prices rising. Revenue on the other hand, is likely to suffer by the reduction in our swollen population which has recently begun and which is so welcome on general grounds, and by the reduction of luxury expenditure which Your Excellency has urged and to which the payment of income tax will itself contribute. Accordingly, even if there had been no intention to make any special contribution to His Majesty's Government I should have proposed some increase of taxation in order to provide ourselves with some margin of reserve. That margin is secured by the proposals Your Excellency has described, the effect of which is as follows.
On the expenditure side the ordinary budget will be relieved of the costs of the Volunteer forces and Air Raid Precautions, estimated in the printed volume at about $1,800,000 for 1940/41. On the revenue side the ordinary budget will benefit by receipts from other new taxation referred to by Your Excellency, principally the imposition of additional duties on petrol and liquor. These proposals are not
221
Page 200Page 201
No comments yet.
Private notes are available after approval.