CO129-595-3 Proposed introduction of income tax 12-12-1946 - 26-1-1947 — Page 23

23

(ise Arail)

Ordinance which, unless anything

unforeseen happens, we anticipate

will come into force this year, in

time to permit tax to be levied on

income accruing during 1946 h 47.

manch

M

We have not yet received an

official copy of the Tax Committee's

report, but according to a draft of

the report brought by Pudney, the

Committee estimated that in. a year

it should be possible to raise as much

as 152 million from a tax on income.

Though the draft Ordinance

taken back by Pudney to Hong Kong is

not on full Income Tax in the technical

sense, it still represents considerable

advance over the 1941 law and will, we

anticipate, help to smoothe the way for

the transition to a normal Income Tax.

You wi

not

think, be very much interested

in the technical aspects, but the chief.

feature of the 1941 Ordinance is that the

123

basis of tax was the source of income

instead of (as in a normal Income Tax)

the individual. There were thus four,

so to speak, separate taxes, viz. on

property, salaries, profits and interest.

The total income was not aggregated and

rebates and allowances were given on each

source. The revised draft, while maintaining

the four distinct taxes, departs radically

from the 1941 Ordinance in that, except in the

case of the tax on salaries, the basis of which

is necessarily individual assessment, no provision

is made for allowances or rebates on the other

sources unless the taxpayer is prepared to be