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Table II.
1939
1940-41 (fifteen months)
ITEM.
ACTUAL.
$
Import Duty on Liquor
Motor Spirit
"J
Tobacco
J
APPROVED REVISED ESTIMATE. ESTIMATE, APPROVED ESTIMATE.
$
1,826,798 2,300,000 2,500,000 200,000
1,395,517 2,300,000 3,300,000 1,000,000
6,362,973 7,000,000 8,300,000 1,300,000
INCREASE OVER
$
Duty on Locally Manufactured
Liquor
Assessed Taxes (Rates)
1.416,856
6,776,168
Estate Duty
(Decrease 25,000) 9,303,100 9,300,000 (Decrease 3,100) 721,528 1,500,000 1,350,000 (Decrease 150,000) 2,531,109 3,000,000 3,380,000 380,000
1,750,000 1.725,000
Kowloon-Canton Railway
Land Sales
Opium Sales
2,212,035 2,785,000 2,840,000
3,102,956 3,995,500 4,200,000
912,905 1,148,400 1,100,000
2,139,819* 1,250,000 1,800,000
55.000
204,500
(Decrease
48,400)
550,000
Expenditure.
3. The expenditure of the year was $37,949,116, being only $191,893 in excess of the original estimate. Nevertheless there were considerable excesses under several Heads, but they were offset by savings under other Heads. Supple- mentary Votes for a total of $6,584,007 were approved by the Legislative Council and the Secretary of State; a large proportion of these Supplementary Votes, amounting to $3,997,580, resulted, directly or indirectly, from the emergency situation brought about by the Sino-Japanese hostilities and by the war with Germany. The principal excesses on individual Heads were:-
Head 5 Charitable Services
6A Volunteer Defence Corps
6B Naval Volunteer Force
6C Air Raid Precautions
20
Police Force
29 Stores Department
31
$725,279 (Relief of Refugees).
312,111 (Preparations for Defence).
148,712 (Mobilization).
508,292 (Preparations for Defence).
137,938 (Emergency Expenses arising from
Sino-Japanese hostilities).
383,972 (Increase in stocks).
Public Works Extraordinary 128,862 (Construction of camps for re- fugees and interned Chinese soldiers).
Most of the other Heads showed savings, the largest saving being one of $1,045,972 under Head 6D, Military Contribution, due to the stabilization of the Contribution.
4. The net result was a surplus of $3,528,935, increasing the surplus of assets over liabilities to $17,091,170 at the 31st December, 1939.
B. ANTICIPATED RESULTS OF 1940-41.
Stamp Duty
Water Revenue
Post Office
Rerenue.
5. The revised estimate of revenue for the fifteen months is $67.000,000. an excess of $16,138,530 over the original estimate of $50,861,470, and of $25,521,948 over the actual revenue of 1939 (twelve months). The main contri-` butory factor to this increase is, of course, the special War Revenue resulting from the new taxation imposed by the War Revenue Ordinance, which was passed by the Legislature on the 25th April, 1940. But the actual Ordinary Revenue for the first fifty weeks of the year was approximately 13.7% more than the proportionate amount of the estimate, based on normal seasonal distribution, and the revised estimate of Ordinary Revenue for the fifteen months is $57,300,000. The increase is principally due to additional duties on imported liquor, motor spirit and tobacco which have been imposed since the outbreak of the war with Germany, and to very largely increased sales of Government opium to meet, in spite of enhanced prices, the demand occasioned by the scarcity of illicit opium due to the Sino-Japanese hostilities in South China. At the same time one must not overlook the continued presence in the Colony of large numbers of persons, the majority of them self- supporting, who have taken refuge here from the disturbances in China, the diver- sion to the Colony of manufacturing and other activities formerly carried on in Shanghai and other cities affected by the hostilities, and the maintenance of the Colony's trade at a high level in spite of the difficulties arising out of the Sino- Japanese and European conflicts. The swollen population and the economic activity directly or indirectly affect most heads of revenue, especially liquor, motor spirit and tobacco duties, rates, Post Office revenue, land sales and receipts from royalties payable by transport companies. Details of the more important items are set out in Table II.
1,026,270 1,000,000 3,000,000 2,000,000-
The draft Estimates for 1940-41 were already in print when the war with Germany broke out in September, 1939, and the Estimates as finally approved make no mention of War Revenue. The necessity for raising more revenue as part of the Colony's war effort, only for the purpose of making contributions in cash or in kind to the Mother Country, was soon realized, however, and although the liquor and motor spirit duties were raised in October, 1939, the main interest centred around Government's proposal to collect Income Tax as soon as the necessary legislation could be drafted and passed. This proposal met with considerable opposition and a War Revenue Committee was appointed which eventually recom- mended in its report that the additional revenue should be raised not by a full Income Tax but by a Salaries Tax, Property Tax and a Corporation and Business Profits Tax, the incidence of which taxes would be on substantially the same classes of the community as an Income Tax and which could not be passed on to the poorer classes.
The Committee's recommendations were adopted by Government
and the yield from War Revenue for the year 1940-41, originally estimated at about six million dollars, is now estimated as follows:-
Salaries Tax
Property
Corporation Profits Tax
Business
Total
$1,000,000
$2,300,000
$5,500,000
$ 900,000
$9,700,000
* Including $839,704 transferred from Government House and City Development Furd.
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