CO129-586-8 War Taxation 2-2-1940 - 11-5-1940 — Page 104

NOOX

CONFIDENTIAL(2)

15 MAR 104 0. 0.

54002/40

GOVERNMENT HOUSE,

21

HONG KONG.

5th March, 1940.

112

Sir,

21/0/39 24/-/39.

Library

encl. to Fired (31)

With reference to my confidential telegram No.373

of 28th October, 1939, and your confidential telegram No.283

of 8th November, 1939, on the subject of the proposal to

introduce Income Tax as a War measure in this Colony, I have

the honour to forward for your information a copy of the

Report of the War Revenue Committee whose appointment was

referred to in my telegram under reference. A War Revenue

Bill forms an appendix to the Report. Clause 60 of the Bill

provides that no tax shall be collectable in respect of any

year of assessment subsequent to the year of assessment in

which the war is terminated. It will be observed that all

members of the Committee signed the Report though three

appended reservations.

2.

While the proposed measure is a partial income tax

its incidence will not, in my opinion, be as equitable as

income tax proper and I must regard the Bill, which is the

product of a Committee, many of whom were laymen, as far from perfect as a taxation measure and as liable, even within its limited scope, to provide many opportunities for avoidance

and evasion. It is my view that in comparison with income tax it is no more than a "pis aller", but as the primary aim of the measure is to provide a gift to His Majesty's

Government towards the conduct of the war I consider that it should be accepted.

THE RIGHT HONOURABLE

MALCOLM MACDONALD, M.P.,

&C.

&C.,

&Cs