extract from the
HONG KONG TELEGRAPH
dated
13th October, 1939.
133
War Taxation
DESPITE the worthy cause to which Government aspires to devote a quarter of our total income-both ordinary and extraordinary-in the twelve months after Income Tax be- comes operative and thereafter for the duration of the war, few people in the Colony will rejoice, either at the assurance that hitherto we have
been among the lowest taxed of the Empire's multitudinous people or that Government is taking steps to remove us from this allegedly enviable position.
Some form of increased taxation: in war-time is inevitable, and no person will fail to agree that it behoves this outpost of Empire to contribute to the utmost to the cause for which our Motherland has staked her future. But the burden of taxa- tion propounded by Government is one which must have consequences inimical to the welfare of a people al- ready reduced to straightened cir- cumstances by their proximity to a war that has been in existence on their door-step for more than two
years.
Government has been careful to claim that the extraordinary increase. in the Colony's revenue during the past twelve months has been due: chiefly to the influx of refugees, many of them self-supporting, and not to any increase in the wealth of the people of the Colony itself. Few Hongkong people, indeed, have not experienced vicissitudes and de." terioration in their standards of living as a result of the neighbouring hostilities and it appears an unfor- tunate fact that Government has been' the only gainer as a result of the" situation that has confronted this Colony since 1937.
To state that the people of the Colony have been lightly taxeɖ in the past seems a somewhat rather. unjustified assertion when applied to the very small percentage of the total population who are the chief taxpayers and who will be the persons mulct of the ten million dollars extra revenue Government expects to raise by the imposition of a ten per cent. tax on income. The bulk of Hongkong's 1,500,000 people pay but a fraction of the existing annual taxation of forty million dollars and will pay nothing what- ever towards the war chest to which this Colony's Government proposes so liberally to pour wealth that can be so ill-spared at this critical time in our history. That ordinary taxa- tion falls So heavily upon the
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minority and so lightly upon the majority is, of course, only right and just, since the bulk of our population, unhappily, is on the verge of destitution and is existing on a standard that admits no excess wealth for purposes other than the barest sustenance. The minority, whose standards of living are the standards of the west, cannot object to carrying the burden thrust upon them under ordinary circumstances by the destitution and poverty of the majority. The fact that this burden is, however, borne by the minority- and it is a small minority-would seem to dispose of the suggestion that
the average Hongkong resident is lightly taxed.
Unli au Income Tax system is brought into force, any statement regarding the number of taxpayers to"whom it. will apply can only be conjectured, since Government, as the Financial Secretary admits, has no means of ascertaining the number of persons who will be directly affected. But it is safe to assume that the minority who will bear the brunt of the new taxation will be infinitesim- ally smaller than the minority who bear the brunt of ordinary taxation, and if the sum of ten million dollars which has been mentioned is not an exaggeration the contribution which this Colony is to make towards the Imperial war. chest will be, per capita of contributors, a staggering one.
It has been estimated by Govern- ment that the Colony's total contribu- tion towards Imperial Defence dur- ing the first year Income Tax operates will be in the vicinity of $16,000,000 (or £1,000,000 sterling) of which amount $6,000,000 will be remitted to the Imperial Government as the Colony's annual Defence Con- tribution, $2,000,000 will be expended on local defences measures and the estimated balance of $8,000,000 will be provided as a free contribution to the Imperial Government for the prosecution of the war with Ger- many. The total represents, in all, twenty-five per cent. of the entire revenue Government estimates it will raise, in twelve months both through ordinary channels and by the in- stitution of income tax.
Were the Colony in a position to afford a contribution of this magni- tude there could be no conceivable objection to it. But the majority of the people of this Colony, even the majority of the European class, are not in the position to pay additional taxation of any substantial nature and at the same time maintain their existing economic level. To the single man, earning $250 a month, and probable support of parents and relatives not covered by the proposed exemptions (as many middle-class Portuguese, Eurasian and Chinese employees certainly are) the pro- posed tax of $90 a year may mean disaster. To the married man with one child, earning $500 a month and already harassed by swollen rents, cost of living that has increased from 20 to 50 per cent, in the last twelve months, and increased school fees,
the additional burden of $62 a year which will be his lot may prove intolerable,
The principle of income tax must find support from every conscien- tious person, and this Colony would be failing in its loyalty and duty to the Motherland if it did not con- tribute to the fullest extent towards the successful prosecution of the war. But the scheme propounded in Legis- lative Council yesterday is manifestly unfair to the medium-paid salaried worker and unfairly generous to the highly paid. The minimum salaries to which taxation will be applied- $165 a month for single men or women, $275 for married men, $375 for married men with one child, $440 for married men with two; children and $475 for married men with three children-appear extra- ordinarily low, The concessions to salaried men with families do not appear generous enough. In effect, the under-$1,000-a-month employee is asked to contribute far too gen- erously in comparison with those of the upper class who can well afford to pay more than is being demanded.
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