CO129-576-10 Estimates 1940 6-10-1939 - 22-10-1940 — Page 228

HONG KONG LEGISLATIVE COUNCIL.

183

Another general complaint has been about the alleged unequal incidence of income tax. In this category are included a large number of complaints and objections on matters of comparatively minor detail, such as that the exemption limit is too low or that the personal allowances should be increased, or that other allowances should be given for various kinds of expenses or liabilities. Obviously no objection of principle can exist to making adjustments in those allowances if so advised by the very representative Committee which Your Excellency has set up to examine these and other details. If I may carry the war into the enemy's camp again, another beauty of Income Tax is precisely that such adjustments can be made in a way which is impossible with any other tax.

Questions have also been asked as to whether such and such perquisites of Government officials and others are to be taxed, for example, free houses. Provisions laying down the treatment of such perquisites are contained in the draft bill now being examined by the Committee, and if they are thought to be inequitable they can be changed. Other inquirers have asked whether the income tax assess- ment would include the squeeze upon which so many of us, official and unofficial, are popularly suppose to live. It is the dream of every zealous income tax official that he will some day find a conscientious burglar who will make a full return of the profits of his profession. I have no doubt that he would similarly welcome a full disclosure from the recipients of squeeze, but I fear that he will have to wait until those members of the public who claim to possess full information on the subject are kind enough to communicate it to the authorities. The other problems of assessment of income and allowances are primarily matters of the drafting of legislation and will no doubt receive the due attention of the Committee.

The third general class of comment relates to evasion. That people will try to evade taxation of any kind is certain, but there are means open to Government for detecting many kinds of attempts at evasion, and this matter also is largely one for discussion by the Committee which is examining the draft legislation. In the course of the long period during which income tax has been in operation in the United Kingdom, a very great variety of methods of evasion have been tried and a great many ways of detecting them have been developed. I do not suppose that the would-be evaders are going to publish their methods, but at any rate the methods announced by those persons who claim to be au fait with the intentions of the evaders are not different from the ordinary stock-in-trade of the tax dodger all over the world. I have never denied personally that this question of prevention of evasion is by far the greatest problem in the administra- tion of income tax, whether here or anywhere else, but I see no reason why it should be less capable of solution here than in other countries. We are being constantly told that income tax has failed in this country or that. All I can say is that in those British countries where it exists to-day, that is not the official view; and there has been a

249