CO129-589-12 War Revenue Ordinance 1941 8-5-1941 - 19-6-1941 — Page 54

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REPORT OF THE RECONSTITUTED WAR REVENUE COMMITTEE.

SIR,

HONG KONG, 23rd May, 1941.

As Chairman of the Reconstituted War Revenue Committee appointed by

Lieutenant-General E. F. Norton on the 23rd January, 1941, I have the honour

to submit the Report of the Committee herewith.

Chapter I.

Terms of Reference.

1. The Committee was reconstituted on 23rd January, 1941, by His Excellency Lieutenant-General E. F. Norton, Officer Administering the Government, to re- examine and advise Government on the existing measures of War Taxation in the light of the Colony's present financial position and the actual receipts from the four taxes imposed by the War Revenue Ordinance, No. 13 of 1940, as amended by Ordinances Nos. 21 and 29 of 1940.

2. The membership of the Committee was substantially the same as that of the original War Revenue Committee, with the substitution of the Honourable Mr. R. R. Todd, Acting Financial Secretary, for the Honourable Mr. H. R. Butters, the Honourable Mr. J. J. Paterson for Mr. D. F. Landale, and Mr. A. G. Clarke, Commissioner of War Taxation, for Mr. T. Black. Mr. C. van Langenberg, Assistant Commissioner of War Taxation, was appointed to the Committee on 21st March, 1941.

I have the honour to be,

Sir,

Your Excellency's most obedient servant,

C. G. ALABASTER.

Ilis Excellency

Sir GEOFFRY ALEXANDER STAFFORD NORTHCOTE, K.C.M.G.,

&c.,

&c.,

&c.

Chapter II.

Details of Meetings, Procedure, etc.

3. Five meetings of the full Committee were held between 5th March and 21st May, 1941.

4. In addition to examining the War Revenue Ordinance, 1940, we were invited by His Excellency the Acting Governor to consider a draft Estate Duty Amendment Bill providing for higher rates of Estate Duty. We recommended the adoption of these new rates of Estate Duty, with the proviso that Government should reconsider them at the end of the war, and the Estate Duty Amendment Ordinance was passed by the Legislative Council on 27th March, 1941, (Ordinance No. 7 of 1941).

5. Our examination of the existing measures of War Taxation was governed by three main considerations :—

And the Plan wh

(a) We were informed by the Financial Secretary that owing to defence measures which had been taken since the Budget for 1941-42 was framed or which were likely to be taken in the near future, the Remed Colony's war expenditure during the present financial year would

$5m. amount to considerably more than the sum of $12,300,000 shown in the printed Estimates. This additional war expenditure was likely to be of the order of $5,500,000. Allowing for an estimated yield in 1941-42 of $9,300,000 from War Taxation on its present basis and a net surplus of revenue over expenditure for the financial year 1940-41 amounting to $3,000,000 which could be carried forward into 1941-42, it was desirable to raise additional revenue to the extent of some five million dollars by modifying the existing War Taxes or by imposing new ones or by a combination of both methods.

(b) From the relatively small number of firms paving Business Profits Tax Iow youn

and the fact that up to 31st March, 1941, the net amount charged in respect of Business Profits Tax was only $1,076,000 as compared with $4,531,000 in respect of Corporation Profits Tax it was evident that a large section of the business community was not bearing its fair share of the Colony's war-time burden.

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