1934-09-28 — Page 7

HONG KONG DAILY PRESS, FRIDAY, SEPTEMBER 28, 1934.

GOVERNMENT AND A POLICY

(Continued from Page 6)

should, therefore, have the sym- pathetic ear of the Government.

Meantime, the amenities already available to the people of Hong Kong, especially in summer, will I trust, not be diminished. I re- fer particularly to the bathing" pavilions at North Point. I put for ward a strong plea for their re-. tention as long as possible. These pavilions are a great boon to the public which use them by the thousands every day in summer. It is not likely at present"that in- dustrial development will spread Immediately in that direction, and the retention of the paviliona should therefore present no great difficulty to the Government and no disadvantage to the Colony, for the time being. In the mean- time new sites should be sought, with accessibility and ense of transport kept in mind.

be reduced from 17 to 13: per cent.

In respect of the first of these three proposals extension of Building Covenants it is a matter for gratification that the Govern- mes has adopted the generous at- Litude of granting free extensions, with subsequent extensions at re- duced rates, in cases of genuine hardship.

It is my understanding that the other two proposals have been referred to the Trade Commission for examination. I have the great- est confidence the Commission, whose personnel is such as to en- courage hopes that its labours will be productive. But while the mea- sures advocated by me were in- tended, as I specifically stated in the memorandum, as palliatives, to be put in operation at once, the task of the Commission is much more far-reaching and must therefore take time to complete. My concern was to enquire into what could be done to alleviate the situation in the meanwhile, and not to explore the whole question of our trade depression. The proposals which were put forward in. the memorandum made no claim to be ultimate solutions;

their

moment

ነገ

Assessment

the remaining floors, subject, di course, to payment out of such tents for Crown rent, Rates, in- surance and repairs. If one of the Hoors is vacant, he receives in rent only $50 a month, but has to pay 17 per cent on the combined rental of the whole tenement, namely, 150. Add to this charge the other disbursements mention ed, and it is clear that his income may be reduced to a starvation point I know of a case in which to floors became vacant, and the there was occupied by the owner Himself, If a mortgage also exists, at it does in many cases in these hard times, the position is still worse, and the owner

may be forced by the mortgagee to sell out at a ruinous price.

To give another illustration. A common type of such three-storey tanement-houses is one in which the ground floor is used as a shop In this case the rents, when all parts are occupied, may be $100 for the ground floor, and $40 for each

of the upper Roors. Pr through slackness of trade, a con dition "too. common to-day, the ground floor is unoccupied, the whole-tenement system of assess ment is a preportionately heavier burden upon the owner. and cox respondingly more disastrous in

I believe, therefore, that the. assessment of Chinese tenement houses by floors, is a measure which would ameliorate the situa ton by lifting part of the burden. now resting upon a large section of the people, and by restoring t some degree the puchasing powez on which business activity largely depends The concession in my view, would not increase the risk of overcrowding. There would be no inducement towards over crowding of floors any more than there is with the present system towards overcrowding of houses.. At any rate, the matter can easily te zocolatert uy law

The Present Situation Now, I come to the policy of the Government in regard to the pre- sent economic situation, as I have .deduced it from the Budget. There is no doubt that the Budget is a sincere and praiseworthy en-

value lles rather in the deavour to adjust the needs of ad-

claim, which may properly be ministration to prevailing condi-

made for them, that they wouldIts results upon livelihood. tions. The Government has been tend to check the downward move. criticised from various, and some-

ment of business generally, so that times even opposing standpoints..

the conditions which have been One such criticism is that. the daily becoming worse may not Government has shown over-

finally deteriorate to a stage at caution in not embarking upon which recovery, even when the new public works. I, too, think opportunity arises, will be most that the Government has erred on

seriously retarded. In short, the the side of caution-though for

measures which I have suggested another reason. Your Excellency's are measures which, if they are to decision not to impose fresh taxa-have any efficacy at all, should tlon "but to meet a rather consi- be adopted at the earliest possible derable deficit out of the surplus balances is indicative of your solicitude not to take any action

Now. in regard to my second which might aggravate our pre- proposal-a change in the method sent difficulties. But I trust I may of assessment-the system which be pardoned for expressing the is at present applied to Chinese, doubt whether the more avoidance; style tenement-houses is logical It is computed' that the sugger of new taxation goes far enough and inequitable, as I shall show, tion, if adopted, would involve in these admittedly bad times.

This matter was dealt with by my loss in revenue of about $860,000 My humble view is that what is honourable trend Mr. T. N. Chau This figure has been arrived a required is some constructive and

and by myself at the meeting of in this way: The vacant floors of courageous action designed to re-

this Couric held on the 12th Chinese tenement houses are es -store confidence and, with it, at October, 1933: It may be useful to

timated to represent roughly 10 least some of our former prosper-repeat here some of the reasori- per cent. of all the rate-paying ity. It seems to me that this sings adduced by the Hon. Mr. T buildings in the Colony. According not a time for excessive adherence N. Chau in favour of the change to the report of the Assessor for to extreme financial orthodoxy. The present system, is economical- 1933-34, the total, valuation of the and that the Government shouldly unsound, for it has the tendency Colony is $38,941.273. Calculated hold out to the people a new hope

of compelling landlords to close on the above basis of 19 per cent.,. by making possible a more confi-

the whole house when there are the decrease in the total valuation dent atmosphere in trade, in in- two or more floors vacant, in orders $3,894,127, and the consequential dustry and in commercial enter-

to enable them to obtain a refund loss to revenue, being 17 per cent prise, by boldly reducing taxation.

of Rates. This may have the ef-

on the latter figure, is about $660 Merely to refrain from increasing fect of spreading the population, 000. I shall later on offer sug taxation is uninspiring and, in but these days of extreme gestions for meeting this addition erect, negative. It is like reveal-

economic depression, the sight of al deficit. ing to the patient the seriousness entirely empty houses dotting all of his disorder, but holding out over the Town, does not conduce to him no hope of positive ald in his recovery.

||

"Falliatives!"

revenue

Reduction In Taxes Wanted In regard to my third and most

to a restoration of confidence important recommendation-a re- essential to recovery. Further, the duction in Assessed Taxes by 4 per may not suffer sub-cent-I may remind Your Excel- stantially by the change, since lency that when this percentage many of the houses now entirely was added in 1930, strong protests vacant will be at least partially were raised by the Chinese com occupied, and Rates will be payable munity. At aineeting of this in respect of such partial occupa Council held on the 20th October, 1930, wheir the Budget for the en- suing fear was under considera tion. I stated that the proposed in creases had caused great concern" among the Chiness, and that re- presentations had been made to the Chinese members of the Legi-

tion.

OF LAISSEZ-FAIRE

Not Lightly Taxed

One of the chief indices of the depth of the economic depression is found in the property values which. have fallen to an enormous extent.

fall in such values is not ari effect merely, but is also a further predisposing cause of depression, owing to the dependence of every line of business upon every other

V have heart it said, time and again, that Hong Kong is light taxed in comprison with other places do not agree with this view. In the special conditions of Hong Kong, with a large migratory population, a comparison of tax- burdens per head is no guide to policy. A maintenance of tax-line burdens beyond the amount ex-" pedient in

conditions, would mean, in Hong view of our peculiar Kong's case, a loss of population and an ultimate loss of revenue.

It seems to me that the time has now come, If it is not already overdue, when a strong stimulus to A revival of confidence and pros- perity is needed, and that such a stimulus could best be provided by the reduction I now proposa.

Any measure, therefore, which is calculated to check fur-

market, if not to stimulate it to ther depression in the property

new activity, is a measure which w.li distribute its beneficial effect throughout business as a whole,

The share market is in to un- duly depressed condition owing to the normal effect of bad times in which many are compelled to sell their holdings in order to raise money for the purpose of carrying On their business or of reducing or paying off mortgages when forced to do so. This condition is further accentuated by speculative Influences. A favourable reaction in the property market would help to remove certain of the factors

ticularly in relation to shares of depressing the share market, par-

real estate companies. This would further help in restoring con- fidence in the established indus- tries of the Colony. Experience shows that there is always a co- relation of movement, between property values and stockš values in this Colony, though the two movements may not synchroniše.

It may be considered by some that a lowering of the Assessment Tax would benefit only an in- terested section of the public. I dissent from this view which, no doubt, is based on a wrong con- ception of what the Assessment

of the Colony. This tax is the Tax means in the public finance

chief mode of direct taxation for Hồng "Kong, and 'must be re- cognised as such. It provides the main contribution to administra- tive costs. from the income of the community. Its incidence is not. to be considered as determined by the v,sible process of its collection. Like the Income Tax n Great Britain. it is the prin-

Shop Keeper's Rent cipal medium whereby taxation is Rent charges form & consider- adjusted to governmental needs able proportion of the costs of When considerable increase of re- many of our small businesses. A venue is required, the normái met- small reduction in this item of his hod is to raise it; when a remissión, ¦ costa may mean all the difference of the burden of taxation is call- to a small tradesman when he is ed for in the interests of the com- besitating whether it is worth munity, the lowering of this tax while to carry on Property- is the natural medium of relief owners who at present, find it dif

ficult, if not impossible, to make concessions of this kind, would be enabled to do so, with a lighter Assessment Tax burden, and would and it in their interest to pass on part of the relief obtained. The rate of mortality among small busi- messes, involving in the mass & serious loss to the Colony, would thus be checked.

Psychological Factors. There may exist. in some quar- ters a doubt that a reduction of the Assessment Tax by 4 per cent. would have material influence on our economic situation, in view of the disparity between this com paratively small percentage and the very large percentage of fall which has taken place in property values. But a mathematical com- parison of percentages is here no true criterion Psychological fac tors, induced by imcertainty and the absence of ameliorative action, wil drive values down far below the level justified by the true economic situation. People simply will not buy at however attractive a price not because the property offered is not worth the price, but because they are so uncertain about the future. A moderate stimulus, removing or allaying this feuing of uncertainty, will do quch more to restore value than a mere mathematical computation would lead us to anticipate. No one would argue that the effect of lowering the British Income Tax by experience could reckoned sa stimulating trade and industry just to the extent of 21 per cent. The effect, largely act ing through psychological forces, has been far greater, as we ail known 20

80%

undertakings

With the return of confidence and hope created by Government- al action premising such a sub- stantial measure of relief, with the assurance that Government is not adopting the laissez-faire policy of leaving recovery to find its own way, hoarded money would come out, property would once more change hands; credit would expand as confidence expands; existing business would be maintained; and so an all-round improvement may be ex- pected. The structure of the pre- sent-day economic system is sucti that its various parts are inter- dependent; a favourable movement in any one quarter being generally reflected in similar movements in

quarters, be other

thái thể amelioration becomes cumulative.

Now, how is the loss in revenue to be made up, if the two pro- posals were carita into effecta? Happily, this a not a case in which an imbalanced Budget entails an increase in public indebtedness. The increased deficit copad, and should I submit, be met out.or the Colony's surplus balances, The surplus of the Colony, it is true, upon to balance the Budget for is alreay being substantially drawn

1935; but that very fact mares it clear that the Goverment is not averse to ari encroachment on its reserves to enable if to balance Budget in difficult times. If, as I have endeavoured to show, the uggested remission is expected to act as a stimulus to the Colony's business and economic outlook, then the policy of drawing on our surplus to meet this particular deficit would be all the more just- nable, since it would be done for Thus if the second and third the purpose of pursuing, not a suggestions made in my second merely negative policy, but a posl memorandum were adopted, pro- tively remedial course of action. perty values in the Colony would at onse

"The Hainy Day" enormous ilgure of 336,000,000, and Colony's surpins balances would Apprentateuynecals further depletion of the the repercussion on the ecofionc not be serious as necessari situation could not but be cons to deter Government from adopt

The depressed cobaition of the Colony's trade and industry is our chief and urgent concern. The Trade Commission is engaged in what we hope will be a fruitful inquiry into causes and remedies. The Hon. Colonial Treasurer, Mr. Its existence, however, does not M. J. Breen, in objeting to the pro- absolve us from the duty of tak posals at the time, said that ing some immeɗate action, where to assess floors separately as pro-

But even the financial effect of a 4 per cent. reduction on the such action can be shown to be posed by us would treble the work

economic life of the community helpful or palliative. When of the revenue collection branch of

would be very considerable. Tak palliatives seem possible, when the Treasury, and more than trestative Counch by public bodies asing the total rateable value at $38,- measures suggest themselves ble the

work of the Assessor's well ag by individuals urging that 941,000, the reduction, would mean which, though they may not con- Office, as the extra supervision the rate should remaid at 13. per that the property owners burden stitute a permanent cure, would would be increased disproportion-cerit. I diso add that the opinion allay the violence of the malady, ately, Mr. Brees went on to say hat been expfossed indz t view This figure represents a 6 per cent. is lightened by about $1,550,000. then, I say, these measures deserve that to assess each Boor separate- the imediate and syniparetle 13. and consequently to refund as living wi

or the bad times, when cost of yield on a total of $25,000,000. 15. consideration of the Government.

very high and the other words, there would be a vacancies decur, would merely volume of trade abnormally low, capital appreciation of real estate During the year I have submit- encourage landlords to remove the any increase in the Rates would values in the Colony to the extent ted for the consideration of the ocupants of a partially occupied have an immediate reaction on the of $25,000;OUBL Government several suggestions floor and crowd the remaining prosperity of the Colony. Whe On the same computation, the ěk. designed to help in the attainment ones. of this object.

ther or not the subsequens further | timated decrease of $880,000 fr In a memoran- I do not think that to change fall in trade has been in part Rates from the change in the dun dated the 7th March 1034, the system would necessitate the accentuated by the increase in the method or assessment would mean I pleaded strongly for a substan-heavy augmentation to staff fear-

tax, it is, of course, Impossible to an appreciation in real estate tial reduction in the charges for would, I submit that It should not probable that this heavier tax ed by the Treasury; but even if it

prove either way. It in at least values of over $10,000,000. excess water consumption. The action of the Government i stand in the way of the change. burden has added to the effects granting a rebate of 15 per cent It is important to bear in mind of the present depression. though it is by no means an ade- that the system 1 advocate has

But whatever the cause or quate allowance is in some already been applied in the case causes, the economic conditions measure, a contribution towards of what are called "European of the Colony have become de the restoration of public confid-style houses" Why shouls there cidedly worse fince the increase in ence, and as such is to be wel be this inconsistency as between the Assessed Taxes was minds in

European-style and Chinese-aty 1930. In another memorandum dated houses? If it be no more than justice in the case of the former

comed.

....

The Hon. Colonial Secretary has spoken of the damculty, when the

detable

i

An Efectivé, Mesna On the other hand, the adoption

the 12th May, 1934, as a result of that each floor should be assessed Treasury has experienced during of the two proposals would mean $10,000,000 was considered ad-

more

comprehensive inquiry conducted by some leading Chin separately, it follows that the ese merchants into the possibilities denial of this concession to the of ameliorative measures, I sub- latter must mean Injustice, and mitted three further proposals, cannot be defended on any valid Those proposals were:-

principle.

(3)

(1) That the Government should, as far as possible. grant extension of time for the fulfilment of building covenants; That, in the take of Chinese tenement houses, axlessment should be made for each noor instead of for the whole house; and That, as a temporary mea sure the ASKERment Tax otherwise known as Rates,

ing the course which I have urged. Bome years ago it was ometally announced that a reserve of about the present alung, hi the collec a sacrifice of revenue to the visable by both the Goverment tion of Rates. He further pointed amount of about $2,200,000. This and the Secretary of State for the out the increased adminstrative sum is made up of $1,550,000 (be Colonies as provision for a ramy work entailed, leading to increased ing 4% of $38,941,000), and $660,- day, so to speak. But even if that stan and, therefore, greater cost 000 (being estimated ices ental-I have advocated meant a of administration, I trust I muy ca by the new method of mess tion of the surplus for a time well not Be accused of giving counten ment). This is admitted ance to delay in Daynefit of taxes, siderable sum, and wou

con below this figure, li wat

if I say that this difretty shoke greatly widen the

further be in my View, & proper

of because property-ow

the fears. It linh to like to pay promptly

do no estimated revenue

Teserves for a ra better ture. Nevertheless,

then to defde that but because

suggestions on the

way that not even without hesitation and

my respons arm conviction

An Illustration Moreover, the present method or aseasment of Chinese-style houses milist, in its results, be an added factor in the present depression The Sreets it may produce can be simply lustrated. Take a thre storey, Chinese bouse Bach foot may go let for a monthly rent or $30. The owner may very com monly occupy one for himself, being and be dependent for his liven unduly high, and hood on the renta recalved from be lowered.

Vedent

did therefore I tive mei

sent

of impro

a perod

(Continu

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