CO129-615-2 Income tax 10-3-1947 - 6-2-1948 — Page 61

HONG KONG LEGISLATIVE COUNCIL

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to tax either individually, or as corporations, or as partnerships with a definite legal status. It is difficult to apply a principle of Income Tax to a people whose earnings are gained from the combined efforts of a family or clan groups and are spent for the maintenance of those groups, and are largely owned in common. The imposition of Income Tax cuts across the whole fabric of the Chinese social structure.

To take but one example. The proposed allowances for depen- dents in this Ordinance, though they might appear liberal enough to ordinary Britons, ignore the fact that in Chinese families dependants are rarely limited to a wife and the children. If one member of a Chinese family is comparatively well to do he is looked to in a large measure to provide for the financial needs, in part at any rate, of his parents, his brothers and sisters, and even of nephews and nieces and more remote kin. No family allowance system devised on western lines could adequately deal with the traditional commitments of the head or the wealthiest member of a Chinese family.

One of the worst consequences of Income Tax is its demoralising tendency to promote evasion. In a Chinese society evasion does not arise merely from an unethical attempt to avoid paying, but from the essential difference between the social units in the East and in the West, and from the inherent difficulty, if not impossibility, of imposing on the family unit a mode of taxation designed for, and produced by, the individualistic society. In spite of the ready acceptance by the British people of this form of tax, it was only a century ago that their social structure and Parliamentary representation has advanced sufficiently to justify the imposition of Income Tax, and to apply this now to a predominantly Chinese population is to ignore the essential and historical difference between the communities affected.

The main opposition to the Income Tax proposition appears to be that systematic and possibly progressive tax of this kind can only be fairly imposed by the freely-elected representatives of the people on themselves, with the assurance that these representatives have full facilities in gauging the amount of money required and in applying its expenditure. In the case of Hong Kong at present, the taxpayers do not know what the requirements are; they are simply told that the Colony is in debt to the mother-country, but they do not know to what extent or in what respect, and they are in a state of com- parative ignorance, on which Government does not enlighten them. The Government has not made any statement as to its plans for the rehabilitation or for the expenditure of the money to be collected. It is asking for a blank cheque.

The taxpayers are entitled to have some say, as they are in England, not only in the imposition of the tax, but in the expenditure of the money, and it is not considered sufficient that the tax has been recommended by a small ad hoc committee which cannot be said by any means to be representative of the taxpayers. While it has been said that the tax has not been imposed without consultation with and recommendation by at least two committees, these, however, were committees appointed by the Government.

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