CO129-582-7 Taxation 6-6-1939 - 5-2-1940 — Page 83

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HONG KONG LEGISLATIVE COUNCIL.

assistance to their Mother Country in her hour of need. That there is a depressing uncertainty in the Colony's whole outlook is the authoritative view of the Financial Secretary himself. The fortuitous { increases in the Colony's revenue serve but to cloak the unsatisfactory position of the Colony's economy. The flight to the Colony of "refugee" capital during the last two years or so is due no doubt to Hong Kong being "a free port, without income tax and without excessive taxation." Its maintenance in the Colony depends on a delicate equilibrium of confidence and of opposing and competitive financial attractions and drawbacks, which may easily be upset. With the dislocation and diminution of trade caused by the war, and by the necessary war measures; with unemployment caused by the closing down of enemy businesses; with a "dead" property market, and a “moribund" share market; with a low dollar and rapidly increasing costs of imported goods and a concomitant increase in the cost of living in general, and in face of reduced earnings-the outlook for the Colony is indeed bleak.

I am satisfied in my own mind that the Colony's contribution can be raised by other means without incurring the risk of "killing the goose that lays the golden egg". I may incidentally point out that other alternatives will obviate the expenditure of an annual sum of $320,000.00 which would be required as administrative charges for the collection of income tax.

Sir, it is my personal conviction that income tax is not suitable for Hong Kong, and cannot be equitably administered; that administra- tive charges will be excessively high; that it will cause untold irritation and inconvenience to the public; and that it will do irreparable harm to the Colony. I am therefore opposed to its introduction.

May I, in conclusion, express the strong hope that Government will find it possible to adopt other alternatives, so as to enable the Colony to make, as a humble gesture of its loyalty and devotion to the common cause, a contribution which, though insignificant in terms of sterling and of the Imperial expenditure, should be all the more acceptable to the Mother Country because it has been raised by measures which command general approbation? (Applause).

THE FINANCIAL SECRETARY.-Your Excellency, The Council has heard three speeches putting very ably certain objections to income tax and it seems desirable that the case which exists on the other side should be stated at this stage rather than at the end of the debate when there will be no opportunity of further rejoinder by any unofficial member. I regret that I shall have to take up a great deal of the Council's time but I do not apologise for it, because the issue is of such importance and complexity that it would be wrong to attempt to deal with it briefly. In fact I propose, with your permission, to refer not only to comments and suggestions which have been made in this Council but to others which have been given publicity elsewhere. If I reply somewhat caustically to some of the suggestions made in the Press I trust that honourable members will realize that I am not

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