CO129-582-7 Taxation 6-6-1939 - 5-2-1940 — Page 166

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assesment

obtained by this means would be quite disproportionate

to the amount of general irritation which would be

caused.

On the other hand a large part of the public

expenditure in Hong Kong is properly municipal

expenditure and it therefore seems appropriate that an

increase in public revenue should to a certain extent be

met by raised assessment. Moreover an increase of

8 per cent would produce an additional $3,000,000 per

annum, and there would be the added advantage of ease

of collection.

Nevertheless the Committee consider that an

increase in the rates would be a regressive rather then

a progressive tax for the following reasons:-

(1) In the long run most of the extra burden would

fall on the tenants, since capital seeking investment in

property would still expect more or less the same net

return after deducting rates.

(2) The tenants consist partly of business enter-

prises, and the effect would be to tax disproportionately those (e.g. factories and dock companies) whose businesses

required a large area of land.

(3)

On the private occupier, assessment acts as:

bears a very approximate income tax, which, however,

more heavily in proportion to income on the poor, instead

of bearing more heavily on the higher incomes.

(4) Finally there is the danger that it would tend

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to encourage the slum dwellings.

In spite, therefore, of the ease and economy of

collection and the size of the yield to be expected, the

Committee conclude that an increase on certain rates should

only be regarded as a last resource, a view which the

Governor