CO129-591-7 Estimates for 1946-1947 12-12-1945 - 14-3-1947 — Page 81

4.

79

additional revenue.

On the whole, both my advisers and myself favour an

Income Tax on normal lines instead of the separate taxes under the War Revenue Ordinance but it is frequently represented by

persons with considerable knowledge of the subject that the amount of evasion under a normal form of Income Tax would be

greater than under the existing system under the War Revenue Ordinance. It is probable that the difficulties in administra-

tion of such a form of taxation would be much greater here than in any other Colony. The capacity of the Chinese to change their names if the existing name has not brought luck to their business and to disappear without trace to set up business again in new surroundings introduces complications unknown to Western Taxation Departments. I mention these points in order to emphasise that before committing Government to an Income Tax on orthodox lines it is necessary to be quite satisfied that there will not be more evasion than under the present system and that the cost of the additional staff necessary to deal with that evasion will not bring the cost of collection of the tax to an excessive figure. These are points on which it is difficult to reach any conclusion until it is possible to discuss them with members of the staff of the War Taxation Department who had practical experience in the collection of the various taxes under the War Revenue Ordinance.

To turn to expenditure, the first point which calls for comment is the tremendous increase in Personal Emoluments as compared with 1941. In that year Personal Emoluments were estimated at 17 million dollars. Today Personal Emoluments are estimated at 22 million dollars and to this figure must be added the sum of 17 million dollars which is the estimated cost of the

7 =

various cost of living allowances.

The bulk of this 17 million