1939-11-10 — Page 17

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FRIDAY, NOVEMBER 10, 1939.

HONGKONG DAILY PRESS,-PAGE 5

FINANCIAL SECRETARY REPLIES TO CRITICISM

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ing the Council with more figures I can confidently assert that I know of no Colony where the general level of taxation in relation to income is lower and no more than one or two where it is as low. In any case my Hon. friend has not pressed his view to the point of denying that the Colony ought to raise more revenue for war pur- pose.

'E

are justified Government may be "disappointed in the yield, but those people who have not been making profits will not be called upon to pay any income tax,

I would interpose at this stage that I can think of no other tax which could equally well be guaranteed to avoid. hitting the unfortunate basi- ness man who has made no profit.

strain in order to render badly 1 am satisfied in my own mind needed assistance to their Mether that the Colony's contribution can Country in her hour of need. That be raised by other means without there is a depressing uncertainty incurring the risk of "killing the in the Colony's whole outlook is the goose that lays the golden egg". authoritative view of the Financial I may incidentally point out that Secretary himself."

other alternatives will obviate the The fortuitous increases in the expenditure of an annual sum of Colony's revenue serve but to cloak] $320.000,00 which would be required the unsatisfactory position of these administrative charges for the Colony's economy. The flight to collection of Income tax. the Colony of "refugee" "capital Str. It is my personal conviction I cannot emphasise too often during the last two years or so is that income tax is not suitable for the apparently general agreement due no doubt to Hongkong, being Hongkong, and cannot be equit-on that issue because it relieves "a free port, without income tax and ably administered; that adminis-the of the necessity to answer such been about the alleged unequal without excessive taxation." Itstrative charges will be excessively objections to Income Tax as that incidence of income tax. In this maintenance in the Colony depends high; that it will cause untold irri-It will injure business by increas-category are included a large num- on a delicate equilibrium of con- tation and inconvenience to the ing charges and costs. That must ber of complaints and objections dence and of opposing and com- public; and that it will do irre- be true of the raising of the same on matters of comparatively minor petitive financial attractions and parable harm to the Colony. I am amount of revenue by any other detall, such as that the exemption drawbacks, which may easily be therefore opposed to its introduc-means and if we are weighing in limit is too low or that the per- com tax against other alternatives, sonal allowances should be in- creased. or that other allowances should be given for various kinds of expenses or liabilities.

upset.

tion.

In fact. It is the general opinion of economists and is amply borne out by experience elsewhere, that income tax

With the dislocation and diminu- May I in conclusion, express objections of that nature must tion of trade caused by the war, the strong hope that Government- weigh down each scale equally. and by the necessary war mea-will find it possible to adopt other sures; with unemployment caused alternatives so as to enable the by the closing down of enemy Colony to make, as a humble ges- businesses; with a "dead" property ture of its loyalty and devotion to market, and a "moribund" share the common cause, a contribution market; with a low dollar and which, though insignificant tr rapidly increasing costs of import- terms of sterling and of the In- ed goods and a concomitant in-pertal expenditure, should be all crease in the cost

of living in the more acceptable to the Mother general, and in face of reduced Country, because it has been raised earnings-the outlook for the by measures which command gen- Colony is indeed bleak..

eral approbation?

MR. SIDNEY CAINE;

Income Tax Best Fitted To Secure Equitable Distribution Of Burden

- constitutes less of an addition to the true costs of a business than any other form of taxa- tion.

UNEQUAL INCIDENCE "Another general complaint has

Obviously no objection of prin- ciple can exist to making adjust- ments in those allowances if so advised by the very representative Committee which Your Excellency has set up to examine these and other detalls. If I may carry the One other suggestion which has another beauty of Income Tax is war into the enemy's camp again, not been put in its extreme form In this Council is that we are ab-can be made in a way which is precisely that such adjustments

ABSOLVED FROM LENDING

solved from lending any more assis- tance to the Imperial Government because we make a regular Defence Contribution in peace time. In effect, Hongkong is to be in the Empire on a basis of limited liability.

impossible with any other tax.

for

FREE HOUSES Questions have, also been asked as to whether such and such per quisites of "Government officials and others are to be taxed. What do honourable members example. free houses: Provisions imagine would be the effect 1 the laying down the treatment of such taxpayer at home had said "we perquialtes are contained in the have paid to keep up an Army and draft bill now being examined by Navy in peace time and we shan't the Committee, and if they are

The Hon, the Financial. Secre- resources of this Colony towards pay any more now?" The present thought to be inequitable they can

tary said:

the prosecution of the war.

Your Excellency,-The Council I do not propose, therefore, to and if that policy had been pursu→

war would have been lost by now be changed. deal with the view expressed ined in the past there would have some quarters, the upshot of which

Hongkong.

is that the Colony is not tha post-ce no British Empire and no tion to pay extra taxation' what- ever.

LIGHTLY TAXED

TRADE DEPRESSION" Turning more directly to income

Other inquirers have asked whether the income tax assESS--

ment would include the squeeze upon which so many of us, off- cial and unofficial, "are popu- larly supposed to Ave.

It is the dream of every zealous

day find 1 conscientious

similarly welcome a full disclosure I have no doubt that he would

from the recipients of squeeze, but I fear that he will have to walt

has heard three speeches putting very ably certain objections to in- come tax and it seems desirable that the case which exisis an' the other side should be stated at this stage rather than at the end of the debate when there will be no I cannot, however, allow to pass tax, a suggestion which has been opportunity of further rejoinder quite unanswered the attempt of given a good deal of prominence is income tax oficial that he will by any unofficial member,

my Hon. friend Mr. Lo to" refute that because the Colony is alleged some I regret that I shall have to the statement that the Colony is to have been suffering during the burglar who will make a full return take up a great deal of the Coun-lightly taxed. That statement is last two years from trade depres of the profits of his profession. cli's time but I do not apologise not intended to refer to the ob- sion consequent on for it, because the issue is of such vious fact that the taxation per Japanese hostilities the imposition the Sino- importance and complexity that it head of population is a fraction of income tax would be an in- would be wrong to attempt to deal of the taxation per head in the tolerable burden. with it briefly. In fact I propose, United Kingdom. That is in- "with your permission, to refer not evitable because the standard of impossible to understand. I am who claim to possess full informa I find that argument almost until those members of the public only to comments and suggestions living of most of the population is not going to discuss in detail tion on the subject are kind enough. which have been made in this so much lower. What is meant by whether there has been any such to communicate it to the authori Council but to others which have the lightness of taxation here is trade depression. The increase in ties. been given publicity elsewhere. a comparison between the taxes the Colony's revenue by approx-. paid here and elsewhere by per-imately 25 per cent. since 1937,

OTHER PROBLEMS The other problems of assess- If I reply somewhat caustically sons in receipt of comparable in the increased dividends paid by ment of income and allowances to some of the suggestions made in the Press I trust that honour- On that basis one has only to and the analysis made by mying of legislation and will no doubt practically all the local companies are primarily matters of the draft- able members will realize that I consider the various taxes one by honourable friend Mr. Lo in his receive the due attention of the am not suggesting that there are one; the percentage of rent paid suggestions to which they would in rates is about one-third of the an entirely opposite direction. But speech this afternoon all point in

Committee. lend any support.

average

England; tobacco, Ilquor and petrol duties are lower if it were true that nobody has than in England or in mest been making any profits for the Colonies; in the United Kingdom last two years I cannot see where there is a general tariff, a standard the burden of an income tax comes customs duty of 10 per cent on in

PRESS SUGGESTIONS

Furthermore, any vigour I may use in expressing the case for this measure should be in- terpreted not as an indication that Government is determin- ed to carry it through against. all opposition, but as an at- tempt to convert opposition which is thought to be mi- conceived. Finally I want to show that the proposal wai not brought forward without a due weighing of "its sequences.

con-

-- WILLING TO CONTRIBUTE

comes.

all ordinary imports, in nearly all other Colonies there is a similar tarif except that the rate is more often 15 per cent. and upwards, while here there is no general; tariff at all; death duties are at a lower rate here than in the United Kingdom; Hongkong has at pre- sent no Income, Tax, whereas In- come Tax in the United Kingdom rises from the 'standard rate of

I start from the assumption [7/6 to no less than 17/- in the which has been so fully confirmed on high incomes, and income by my honourable friends among taxes at various rates have existed the unofficial members that there for many years in a number of Is a general willingness and desire Colonies. to contribute substantially to the revenue of the Government in order to enable. the Government to lend assistance suitable to the

COLONIAL FINANCES

It has been my business for Jears finances and without bardén-

to study Colantal

INCOME TAX

The great beauty of an in- come tax is that if you have no income you pay no tax, and if it were really true that the business man and the property owner had been making no profits the only people who would remain liable to income `tax would be Government offi- clals, for whom I am surprised to find wach active public' sympathy,

More seriously, the question

The third general cla s of comment relates to evasion. That people will try to evado taxation of any kind is certain, ** but there are means open to Government for detecting many kinds of attempts at evasion, and this matter also is Largely one for discussion by the Committee which is exam- Ining the draft legislation In the course of the long period during which income tax has been in operation in the United Kingdom, a very great variety of methods of evasion have been tried and a great many ways of detecting them have been develop- ed.

TAX-DODGERS

I do not suppose that the would- whether pronts are now as large be evaders are going to publish as they were some time ago affects their methods, but at any rate the not the equity of the tax but its methods announced by those per- probable yield. If the gloomier sons who claim to be au fait with views which have been put forward the intentions of the evaders are:-