CO129-623-8 Estimates of Expenditure- includes a report for the year ending March 1951 1-12-1949 - 31-3-1951 — Page 272

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INWARD TELEGRAM

This document must be paraphrased if the communication of its contents to any person outside Government Service is authorised.

TO THE SECRETARY OF STATE FOR THE COLONIES

COPY FOR REGISTRATION

FROM HONG KONG (Sir A. Grantham)

PRIORITY

30th

D. 30th March, 1950.

#

08.40 hrs.

30 MAR

K

4

中皿

388

1950

I

1 I

6

No.335

1.

(5)

Confidential.

Your telegram No.326.

Xstimates.

52652

Proposal to increase standard rate of Earnings and Profits Tax from 10 to 15% has evoked storm of protest both in and out of Council. However majority of unofficial members have accepted the necessity for covering deficit bat difference of opinion is on manner in which this should be done,

2.

Several of them have put forward counter proposal that Business Registration Tax of $300 per annum should be imposed. As a necessary accompaniment to this they are willing to accept registration of business names including names of all partners together with their aliases. This would tend to check evasion and would be very valuable step forward, for as you will recollect, Chinese opinion has hitherto been extremely strongly opposed to any such measure, We should therefore be foolish not to take advantage of this opportunity of practically unanimous vote on this issue as opportunity is unlikely to

recur.

3.

Business registration fee had already been considered by Government though in somewhat different form but when it was discussed there seemed to be no possible hope that compulsory registration of names of partners with their aliases would be accepted. Registration fee would in effect be sort of Minima Profits Tax. It only amounts to 83 cents a day so sven smallest business should produce sufficient profit to nover such small levy, Some evasion has been taking place in the case of small businesses and cases have in fact come to light where businesses have been split into four parts but all carried on in same room. The proposed new tax would ensure that all parts paid something and when registration is complete which will not be for some time it would put a stop to the introduction of fictitious partners or the increase in the numbers of apparent partners by the use of aliases. These small traders enjoy the security offered by the Colony so it is reasonable that they should pay something towards maintaining that security.

In these circumstances I proposed to adopt this proposed tax. The yield will of course not be sufficient to produce additional revenue of 12 million dollars which is our aim and I therefore propose to proseed with the original proposal to raise the standard rate of tax under the Inland Revenue Ordinance but to compromise by an increase to 12 per cent instead of 15 per cent, Thase two measures together should preduce the 12 million dollare which we aim at and there is

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