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estimated at just over $141,000,000, the balance of $10,000,000 being made up by arrears of Earnings and Profits Tax which could not be collected before the close of the financial year 1947/48.
3.
It will be recollected that when the 1947/48 Estimates were introduced, the standard rate for the new Earnings and Profits Tax had not been fixed, and it was only possible to include a token figure which was taken at $16,000,000. Owing to difficulties over the recruitment of assessors, the collection of tax is considerably in arrears and receipts up to the end of 1947/48 only totalled about $14,000,000, though the total amount due in respect of that year is estimated at $30,000,000. The staff position has improved latterly and it is hoped that it will improve still further during the present year. It is, however, unlikely that assessments will be up to date by the end of the financial year 1948/49, although arrears outstanding should be on a considerably smaller scale than at present. In 1948/49 it is expected that it will be possible to collect $40,000,000, including arrears carried over from the previous
year.
9. The fact that the Budget was only balanced by the fortuitous circumstance that considerable arrears of Earnings and Profits Tax will be collected in 1948/49 instead of during the year in which they fell due, was strongly stressed in Legislative Council, when it was pointed out that, before next year's Budget was presented, it would be necessary either to cut expenditure or to increase revenue by means of further taxation. It would, of course, have been preferable to have adopted one of these courses on the present occasion, but it was not possible to keep expenditure
within the normal revenue figure, and the levying of additional taxation at the present moment also presents difficulties.
10.
As I have explained in the third paragraph of my
(7) telegram No. 350 of the 30th March, I should be most reluctant
If,
to increase the standard rate of Earnings and Profits Tax at the present juncture. Owing to lack of progress in the recruitment of assessors, rather less than half of the estimated tax due in respect of 1947/48 was collected before the end of the financial year, and the collections made were mostly from large taxpayers, provisional assessments having been resorted to in many cases. With such an inadequate staff, the greatest difficulty is being experienced in checking assessments, but fortunately evasion so far appears to have been on a smaller scale than was expected. however, the standard race were increased, evasion would certainly become widespread. It will be quite impossible, while the staff remains at its present low level, to bring the assessments up to date and to combat large scale evasion. I, therefore, recommended that nothing should be done in the nature of an increase in the standard rate of tax until the establishment of assessors has been brought up to its proper strength. Staff considerations also rule out any possibility of providing, for the time being, for the tax of income received in the Colony, such as remittances to refugees, but this matter is being kept in mind.
11. Expenditure is estimated at $150,284,105 as compared with the 1947/48 estimate of $109,834,355 which, as a result of salary adjustments with effect from the 1st January, 1947, was later revised to a figure of $120,071,359. The 1948/49 expenditure includes $10,638,500 in respect of Public Works
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