CO129-582-7 Taxation 6-6-1939 - 5-2-1940 — Page 131

extract from the

SOUTH CHINA MORNING POST

dated

13th October, 1939.

13

Grand Squeeze

The public had been prepared to hear of heavy special expendi- ture additional to the ordinary Budget, and of further taxation to meet it. It had not, however, expected the large requests which Government administered yesterday-petrol and liquor taxes doubled, school fees to be increased, hospital fees also (probably) and utility company royalties (which will mean high- er charges); restrictions upon exchange transactions and upon imports and exports, which will not only raise the cost of living further but will reduce the Colony's total wage—and, on top of all this, Income Tax at 10%. The Governor remarked that Income Tax even at the relatively low basic rate of two shillings in the pound must inevitably give a shock to the social and com- mercial structures of the Colony. That fails to express the reac- tion. Because of the low dollar, high rents, continuously rising cost of living and reduction of the Colony's income, few resi- dents to-day have any substan- tial margin. There are wealthy refugees: but the general feeling is one of distress. Perhaps when the first concussion has passed the community will bow philosophically to the seemingly inevitable; but it will be sur- prising if there is not a loud outcry.

His Excellency and the Fin- ancial Secretary both repeated in effect that familiar state- ment that this community is lightly taxed. This legend has persisted officially for

SO

many.

It must be pointed out years. again that it is true concerning but a small part of the com- munity. The per capita com- putation is fallacious, since the of wealth is distribution

and the stan- unknown

of living is dard

SO low. Moreover, the Colony lacks the amenities and services provided in Britain. There is neither an old age pension nor unemploy-

The insurance. ment ranks of the Government Service are not open to the Hongkong citizen: he has no vote nor does he enjoy the full privileges of a British subject-his nation- ality is only stressed for taxa- tion purposes. The Colony is'

upper:

!

predominantly Chinese. It has therefore a dual allegiance and' a dual commitment. These have emphasised themselves in the' Far East war that has been rag- ing for two years--a war which has profited some in the Colony, but bled the majority through many economic wounds. No other part of the Empire has suffered this strain.

more

The shadow of Income Tax has loomed for some years, and definitely since the Taxation Committee's report earlier this year. It is general-

ly agreed that Income Tax is the' ideal form of revenue raising— provided it is collected equitably and in reasonable amount. Government must be credited with the intention to make all pay. The haste, however, and the known difficulties, arouse the fear that only those whose in- comes can easily be ascertained -principally the wage slaves- will be mulct. Even so, if the tax were not high and if ade- quate social service were to be enjoyed in return, objection would not be more than petty grumbling. None of the essen- tial conditions for consent ap- pears to be served. If 10% is low, so are the exemptions and allow- ances. The employee earning $1,000 per month (£58 instead of the old conventional £100), if married and with two children will have to pay some $50 a month more to Government. If he lives at a distance the 500 or more car miles which he must drive monthly will cost him up to $10 a month in additional petrol tax. Other imposts will add to the toll. Observing that sixty dollars a month

are the wages of three servants, it would seem that the effects will be far- reaching.

The British members of the community are quite conscious of the obligation upon the Colony to contribute its share towards the war cost. The ' most loyal resident, however, is entitled to insist upon fair pro- portion. Apart from the two years' strain already experien- ced, it is not appropriate that the Colony should make the same contribution to the war as the United Kingdom: the signi- ficance of defence is entire- ly different. It is certainly not equitable that it should pay (proportionately to its revenue)

more than any other part of the Empire. The annual $7,000,000 gift for the duration of the war is in addition to the $6,000,000 Defence Contribution, which is itself normally a greater per- centage than is devoted to de- fence even in the United King- dom. No part of the $7,000,000 in the is likely to be spent Colony. The $13,000,000 per year will be approximately 25 per cent. of the Colony's revenue- to be paid in greater part by Chinese, who may be pardoned if they fail to exclude from their ears their own fatherland's cries for aid, and if they recall the which upon occasions many Government has postponed pub- lic works and refused to improve the amenities because of lack of money. If these proposals are adopted, there will be a flight of all restric- capital despite tions: and Government cannot with good face expect the Colony also to respond to the call for War Charities. The Colony's own unshared burdens cannot be ignored and Government ideas will need much revision if the unfortunate impression is not to be given that Hongkong is re- garded as an everlasting orange, to be squeezed as required.