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MR. T. E. PEARCE
Difficult Problem of Chinese
Account Books
ACCOUNTANTS' VIEWS
The Hon. Mr. T. E. Pearce said: Before dealing with the proposal to introduce a Special War Budget, I have some general observations to make on the Ordinary Budget for 1940-41.
I appreciate the fact these estim- ates were drawn up and completed before the outbreak of the present| war, and I also appreciate the fact the Secretary of State has recom- mended that we should continue with our social services, but I do not interpret in these recommendations that we are to provide for expendi- ture on a lavish scale, to the tune of millions, for
and new
expensive
schemes during the present abnormal state of affairs.
In the Financial Secretary's memorandum on the financial posi- tion and estimates, we read following:
the
"In view of the uncertain outlook it has been decided to suspend com- pletely all work on the Government House, and no funds for it are to be provided in 1940-41."
I am no pessimist as far as thel future of this Coony is concerned, but I do feel this same policy should have been adopted throughout this Budget, for I maintain and do sincerely suggest that the present is a time for caution and curtailment, and that not only the new Govern-| ment House but other works, impor- tant though they may be, should have been held in abeyance until the atmosphere clears, and a more normal state of affairs prevail.
War Prosperity.
It is clear Government has not altogether lost sight of the fact the recent prosperity of the Colony has been due to a number of fortuitous circumstances, due to the Sino- Japanese conflict, for in numerous items of increased Revenue, the ex- planations repeatedly given are, "In- creased population," "Rise in Rentals and less vacant tenements," and such like.
Apart from these indications, there is no gainsaying that much of this Colony's prosperity during the last
24 months has been due to the fact it has been a larger clearing house for China's trade than ever before, be- cause of difficulties in other ports in China. I therefore hold a strong view, not fully shared by my col- leagues, that this Budget, coming at a time when the situation is obscure, should have been framed to show a large surplus, which if realised, could have been held in a special reserve, and utilised at some more suitable time for the various pro- jects referred to by the Senior Unofficial Member. It would, I am convinced, have been more business- like to have postponed these pro- jects and given them consideration when prices of iron, steel and other imported requirements for building had returned to pre-war and reason- able levels.
Social Services
The rapid growth of the Medical Department with its formidable number of highly paid staff, and consequent increasing pensions list calls for some comment. I am ap- preciative of the work being done and not unmindful of the lack of Hospital facilities as shown in the comprehensive Report recently published. I hope I shall not be described as heartless, if I here ex- press doubts as to whether the Colony can afford to pay this Doctors bill.
enormous
I
The question of providing bigger hospital accommodation will no doubt be tackled in due course. hope when that time comes every care will be taken to see there is no extravagance or unnecessary expen- diture incurred.
In the meantime, I hope the Director will, when developing the numerous schemes he now has in hand, keep a watchful eye on ex- penditure.
As I have frequently referred to expenditure on Air Raid Precautions at meetings of the Finance Com- mittee, I must here again express my scepticism as to whether the Colony is getting full value for its money. I cannot believe it was ever anticipated that such a big amount was to be expended, and hope the expenditure on capital account for this new department will soon be completed.
&
Dirty Streets
I regret that I must level complaint against the Sani- tary Department, on the
ques- tion of the cleanliness of our streets. I believe there is some difference of opinion in regard to this matter, and also some difficulty in regard to the water supply required. I hope that a satisfactory solution of these differences will be arrived at, for I feel strongly, as do many others, that money will be well spent if our roads and streets are kept in clear condition.
I must also comment on the Squatter Settlements in various over- crowded districts, particularly the way matshed buildings are allowed indiscriminately on the hillsides. I appreciate there are numerous diffi- culties in the way, but I maintain these settlements are no credit to whoever is responsible for their supervision.
As one who has from time to time voiced criticism, I should be wanting, in my duty if I did not make some reference to Pensions, for this is a sub- ject that is constantly discussed in business circles with ever increasing alarm and apprehension.
The Colony is fully justified in its demands that this question be tackled forthwith, and a scheme evolved whereby it will definitely know its total commitments from year to year, and not have to rely upon an estimate in the Annual Budget. I cannot believe there is any better service the Financial Secretary render this Colony than for him to solve this stupendous problem satis- factorily.
can
Immediate Attention Although I am not altogether satisfied the pensions already being enjoyed cannot be put on a proper actuarial basis, the future could, I believe, be catered for by the institu- tion of some sound Provident Scheme.
I venture to suggest, Sir, this ques- tion of Pensions is already getting out of hand, and unless dealt with firmly, efficiently and immediately, will be too heavy a load for this Colony to bear.
I hope it will not be long before Government can make some an- nouncement that an expert is dealing with the whole question.
Coming now, Sir, to the question of the Special War Budget, and the pro- posal to introduce Income Tax to pro- vide funds to meet that Budget, I gladly avail myself of the Honour- able the Financial Secretary's invita- tion made in the opening sentences of his speech to make some rejoinder to his arguments and contentions. I am also grateful to you, Sir, for agreeing to a postponement of this adjourned Council Meeting until to-day. This courtesy is very much appreciated.
Nothing but Hindrance The Honourable the Financial
with bias in Secretary, naturally favour of the Tax, has ably dealt with its numerous aspects and has assailed the arguments made by Unofficial Members with spirit, but his argu- ments are not convincing. After close scrutiny of his speech, I can see no reason to alter my views. I am still of the opinion that the introduc- tion of this particular form of taxa- ¡tion cannot be anything but a hind- rance and deterrent to the business of this Colony. I hold it is of paramount importance that the cheap and easy facilities offered by this port must be maintained, and that its financial structure to deal with this trade is not hampered.
I am in agreement with the Honour- able Financial Secretary when he declines to accept the allegation that the Colony has been suffering during the last two years from trade depres- sion
the Sino- in consequence of Japanese hostilities. The view of my Unofficial colleagues and the comme. - cial community generally is that the Celony has undoubtedly enjoyed wave of prosperity. But at the same time there is no doubt that those con- ditions have been abnormal and must be entirely ignored when measuring the Colony's taxable capacity.
Difficulties of Collection
d
I must take issue with the Honour- able Financial Secretary's arguments regarding the expenditure which will be incurred and the difficulties which
will be met in the collection of the Tax. I suggest, with all due defer- erce, that to inaugurate a big and im- portant department by "drawing the staff required from other branches of the Government Service, whose tivities will have to be reduced to some extent," is a proposition which is untenable.
ac-
The intricacies of Income Tax collection in Great Britain remains to this day a problem difficult of solution. The Financial Secretary will be aware that there are many experts finding an honest livelihood advising clients, who have no thoughts whatsoever of the evasion of Income Tax. I am not impressed with the argument that ex- į pert assistance will not be required.
I maintain the situation out here ir regard to this matter must be com- plicated, much more complicated than at Home, where despite many years during which the tax has been in operation, legal problems are a con- stant source of litigation.
Accountants' Views
One further word in regard to the matter of collection of the tax, and that is the question of Chinese ac- counts and accountancy. The Honour- able the Senior Chinese Member, in his speech, dealt with this matter, pointing out difficultlies that would certainly arise. I must frankly con- fess that I am disappointed at the manner in which the Financial Secretary lightly passes over these comments. In support of
my hon-
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frea is
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