CO129-597-1 Estimates 1948 15-11-1946 - 12-6-1948 — Page 134

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We estimate that while the present popularity of Sweepstakes continues this should result in an increase in revenue amounting to $500,000 in a full year.

(iv)

The Committee also considered the desirability of raising the Betting Tax from 3% to 5%

This proposal was discussed by the Committee and also informally by certain members of the Committee with the Secretary and sane of the Stewards of the Jockey Club. There are a number of complications and it is necessary to bear in mind that the odds on betting at race meetings in Hong Kong are usually so short that course betting is very suscepti- ble to any additional charge. In view of this, any further increase in the Betting Tax is a matter which requires very careful consideration for, if the tax is increased beyond a certain point, a loss in revenue would be the result. Nevertheless we feel that the proposal to increase the rate of tax is worth pursuing and we recommend that the question should be taken up officially with the Jockey Club as it is essential that that body should be fully consulted and that their co-operation should be enlisted.

(~) The Committee recommend that the licences specified in the schedule annexed to this Report be increased to the amount shown therein and thạt the new licence for skating rinks indicated in that schedule be instituted.

We have recommended that the licence fee for all commercial vehicles fitted with pneumatic tyres should in future be the same. The present licence fee of $5.00 for commercial vehicles using motor spirit appears to us to be totally inadequate.

We estimate that the increase in revenue which will result from these proposals will in a full year amount to $350,000.

RECOMMENDATION RE INCOME TAX

(Para (ii) 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 Ord- inance 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 taxa- tion 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 standards generally expected in the middle of the 20th century. Complete new income tax legisla- tion 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 provi- sion for deductions in respect of Life Insurance premia and the carrying forward of losses against future profits.

Thus even if the War Revenue Ordinance were left on the Statute Book a good deal of amendment would be necessary and as the introduction of completely new legislation before the end of the present financial year is not a practical

propositions