CO129-615-2 Income tax 10-3-1947 - 6-2-1948 — Page 65

HONG KONG LEGISLATIVE COUNCIL

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Perhaps I should also refer to a suggested business licence or capital tax. I am not clear how this would operate, but it would be interesting to know how it is applied to professional men and women. I can only assume that this is one of the cases, which I am very glad to note have been considerably cut down in this bill, where the matter would be left to the discretion of the Commissioner.

The consideration, however, that has weighed most with me in connection with this bill is that the cost of living in this Colony is extremely high, at such a height that perhaps we may hope it is only temporary, and this certainly involves the proposition that nothing shall be done to make it higher. This is the point where many will disagree with me, but I am convinced that any form of taxation which is not based on the income or profits of the individuals in the Colony who can afford to pay will lead to that result. I cannot say that persons who are not intended to pay these taxes will not have them passed on. I have already come across a case where the interest tax has sent the interest up, but it is, I hope true, if it is not obvious at the moment, that supply and demand will deal with this problem. On the other hand, so far as I can see, any effective tax which has been suggested will automatically cause a demand for increased wages from the many people in this Colony who will not be directly affected by this bill, demands which it would be difficult, if not impossible, to refuse.

This Colony has up to date, in my opinion, enjoyed a great measure of freedom from post-war labour trouble, and it would be disastrous in the extreme to bring in taxes which, directly affecting persons who will not generally be affected by this bill, would cause industrial trouble that could be avoided.

In connection with this point, Sir, I am further influenced by the fact that we know it has been agreed that a general increase in rents in the Colony will shortly be permitted, and it would be more than unfortunate if this coincided with a general increase of prices from indirect taxation. I venture to make the last observation as I feel that many will, so long as the bill is reasonable, pay their share of the tax without regard to recouping themselves from others, even assuming, as I have suggested, that competition may prevent this being done in the majority of cases.

This brings me to a point which I regard as of great importance. Much of the opposition to this bill, and it is very considerable, arises from the feeling that this is the beginning of the end. That as the evaders succeed in evading, the others will be forced to pay in their stead, and furthermore that the breach having been made it will be enlarged for the benefit of Government officials who, they consider, are already, compared with their opposite numbers in private life, very comfortably placed. In the past these fears have not been groundless, but, as I remarked in a previous speech in this Council, I felt that there was much more harmony between the parties than before the war, harmony which, however, was not being helped by requisitioning.

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