CO129-597-2 Estimates 1949 1-3-1948 - 14-7-1949 — Page 205

B.F.

REVENUE

HONG KONG ESTIMATES

-

1948/9

205

1. As compared with the revised figures for 1947/8, revenue at $151.4m is

$1m lower and this figure includes $10m arrears of Earnings and Profits tax.

So for practical purposes 1948 revenue is some $11m lower than the revised figure

for the previous year.

In the light of clear necessity to tap the foam in order (i) to suck up

inflationary monies (ii) to ease the pressure on loan funds (see below) (iii) to

finance development and other desirable projects, and (iv) to build up a reserve,

this is a disappointing result.

2. Details

but

from p.6 of the estimates it appears that

duties are down by $12m

licences are down by $1m

post office receipts are down by Sim

railway receipts are down by $1.4m

rates are up by $1m

and internal revenues are up by $22m (but this includes $10m

(5)

arrears)

3. We should ask why duties are down so heavily over last year's revised

figures. But more positive steps are needed. The first necessity is a clear cut

set out financial policy in Hong Kong, based on the doctrine start in C.0. tele. No.

357 of 15th March. The first point of attack is revenue. What is needed here is

a change of attitude. From time to time suggestions have been made to the Governor

for increasing revenue - eg. stepping up the rate of earnings and profits tax, and

widening its scope to include income derived by Hong Kong residents from investments

held outside the Colony. The Governor claims that it would be impossible to

implement those suggestions because of staff shortages.

.

It is easy to knock down proposals made from Whitehall; but in the absence

of any concrete effort locally we should persist in our efforts,tombining with them

itam an injunction that steps should be taken in the Colony to produce some ideas/to

bridge the great gap between the Colony's economic prosperity and its fiscal poverty.

slic

aragain

The Governor might be asked to set up a committee to enquire into ways and

means of raising substantial new revenue. It is surely not beyond the wit of man

to devise a tax, or taxes, which will catch the right people and yet be fairly easy

1.