CO129-595-3 Proposed introduction of income tax 12-12-1946 - 26-1-1947 — Page 109

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RECOMMENDATION RE INCOME TAX

(Para (11)(c) of the terms of reference)

We have discussed at length the question of

the imposition of an Income Tax in the place of the taxation at present authorised by the War Revenue Ordinance of 1941.

It was generally agreed that the imposition of a tax on incomes would theoretically result in the most equitable distribution of the burden of taxation

and that a tax on incomes is inevitable here if the

budget of the Colony is to be balanced and if Hong Kong is to conform to the s tandards generally expected in the middle of the 20th century. Complete new income tax legislation will take a long time to prepare and cannot possibly be brought into operation in sufficient time to collect tax during 1947 on the basis of income which accrued during the year ending 31st March 1947. We

consider it essential that in order to meet local conditions any income tax legislation must be as simple as possible and some departures from general practice elsewhere will be necessary.

The War Revenue Ordinance 1941 is still

technically in operation as no Peace Treaty has yet been concluded. This was however, always regarded as

a purely temporary measure and it did not in consequence contain a number of provisions which would normally have been included in permanent legislation of this kind. In the main it operated fairly satisfactorily but,

if it is to remain in operation, certain modifications will be desirable such as provision for deductions

4.

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