CO129-582-7 Taxation 6-6-1939 - 5-2-1940 — Page 35

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situation in the Colony, advocated the imposition of an

income tax. What they did advocate was that the

possibility which occurred to them less unfavour-

able than had in past years been assumed, was worth

careful investigation by an expert; but the war

interrupted the effort to find an investigator.

The Governor's purpose was that income tax

as wa

rates/

should be introduced at such rates/ to permit for a

handsome surplus of the yield being available for

presentation to H.M.G. as a contribution towards the

cost of the war. On that basis it seem taking

out of the question to force the measure through by

the use of the official majority; and in any case, as

this would be the first attempt at administering an

income tax in Hong Kong,I should expect the lack of co-operation on the part of the Chinese community, in particular, to be effective enough to secure a

large measure of evasion.

It might be permissible to force an income

tax measure through by the use of the official majority

if the yield aimed at were confined to meet the

essential expenditure of the Colonial Government but

that would be an unsatisfactory decision both to the

Colonial Government and to the European and Chinese

Members of the Council who,one need not doubt, are

genuinely anxious now as in the last war to make a

worthy contribution to H.M.G.

On the question whether a local compromise

can be assisted by the Governor being authorised to

give an undertaking that income tax would not be

retained in peace time without further reference to the

Legislative Council the Secretary of State has

written