1939-11-10 — Page 19

FRIDAY, NOVEMBER 10, 1939.

HONGKONG DAILY PRESS-PAGE. 7.

SWEEPING UP INCOMES WITH UNPOPULAR BROOM

INCREASES IN DUTY

As regards liquor and petrol the main objection to any such increase is that there is

that there is something unfair in It is of very real Importance

The Committee on the Bill has in fact already agreed upon one Proposals which have more to the criticisms of imperfect on that any tax of the magnitude we Important recommendation with commend them in the way of sim-which are levelled against the sug- are discussing should be levied not that end and I myself have inplicity are for further increases in gested-income tax. Because in- merely conveniently but equitably, mind to propose others, e.g., some the duty on quar, petrol and come tax professedly attempts to and should be placed on the special concession to, newly estab- | tobacco.

adjust the burden" fairly in a way shoulders best able to bear it. lished factories. It is therefore

that no other tax pretends to do possible to pope' that whatever

EQUITABLE TAX it is hotly criticised because it does foundation those apprehensions

I believe that no member of this not reach 100 per cent, fairness. had in fact will be further reduced

I have already suggested that income tax is best fitted to secure Council will venture to.. deny that when the draft Bil emerges from

Robody thinks of demanding the an equitable distribution of the the Committee.

abolition of other taxes because burden, and I think it would be they are not free from evasion. discreditable to us all if we were, and nobody thinks of abolishing to falter in the attempt to secure - the rates because the assessment that ideal of justice and equity be do not correspond exactly with cause of minor, difficulties and ex-

a point at which increased duty leads to diminished, con sumption, and it is probable that we could not get a very much larger gross revenue from these duties than we ex- pect to get as they now ständ.

penses of administration.

I would like to close by pointing

ECONOMIC EFFECT, This whole question of the economic effect moreover, re- -quires examination by comparison with the effect of the possible al-

The same applies in principle to the periodical fluctuations in the ternatives to an income tax, which tobacco, and there is the addition-actual rents of properties; but for is the last matter I want to dis-al objection that that duty is in income tax other standards are to that sentiment with a personal the main bald by the poorer class applied and it is practically sug of the community.

gested that unless we can guaran In any case it is quite certain tee 100 per cent efficiency it will that any additional revenue that be grassly inequitable even to at can be got from these duties would įtempt that fair distribution of the be very much smaller than the burden which is rightly claimed amount expected from income tax.for it.

cuss.

The Government is very willing to consider such alter- natives and certainly, did not make the present proposal without having already,' con-- sidered a great many, I ob- serve, however, that neither of my Chinese friends has made Any specific suggestions for al- ternatives.

r

TAX ON DIVIDENDS

If we are to choose between one kind of tax and another 1 would ask that we should not make the choice on grounds merely of convenience of ad- ministration,

The honourable and learned member, Sir Henry Pollock, has suggested, inter alia, a tax on I suspect that the honourable dividends of Hongkong companies. Mr. Lo, at any rate, remembers our I would submit three criticisms. discussions in the Taxation. Com- First, is it equitable to tax the mittee, on which he rendered such limited liability company and not valuable assistance, and fully the partnership, to tax capital in- really realises the objections to vested in local companies and not. MR. S. H. DODWELL: other methods of taxation which capital invested in companies re- led that Committee to advise un-gistered elsewhere? Second, what animously that an income tax was is to prevent

in principle the best method,

WILD SUGGESTIONS

77

Of suggestions which are capable of yielding a ready substantial revenue I start with the introduc tion of a general customs tarif.

CUSTOMS DEPT.

example. It so happens that none of the alternatives which have been suggested here or elsewhere would call for "any appreciable sacrifice on my own part: only an income tax will really hit me. The same must be true of many others in the higher income groups.

Certainly I could not feel content if alternative taxation were adopt- ed which merely diverted my share of the burden to others less able to bear it.

Government Saddled

With Three Great Disabilities

such companies transferring their registration to Shanghal and paying' their divi- Of the suggestions which have dends there even if the profits are been put forward some are ex-earned in Hongkong? Third, and tremely wild, such as the pro- most important, it is one of the posal to repudiate Government's valid objections to income tax as The Hon. Mr. S. H. Dodwell, said: | opposition to the policy. If only the pension liabilities to the extent of a war tax that a part of the yield Your Excellency-Though the Bud- Government would be businesslike 50 per cent; others would

be will be paid on income liable to get before us today is a heavy one in all directions. trivial in yield and expensive to United Kingdom income tax and considering the world situation, collect, eg. duties on cosmetics, a will be recovered by the payers the explanations given to the the three disabilities I have men- Some radical change in regard to system of Government lotteries. from the United Kingdom Exche-Select Committee have satisfied loned seems essential, and would -etc.

quer; nearly all that income con- me that it would be false economy so increase the efficiency [of the Still others while not hard to sists of dividends on Hongkong not to proceed with the Public whole service that substantial re- collect could not yield any very shares, so that a very high propor- Works Extraordinary programme, ductions in staff and overhead large sums. Among those I would tion of our receipts from such a unless our revenue shows signs of would result. include the suggestions of the

levy, probably 50 per cent. would a serious decline. Should this Chonourable and learned

the

VEXED QUESTION Senior unofficial member for sur-

be drawn from the pockets of His occur, the contingency is satisfac- With regard to this much vexed torily covered by the assurance we question of Income Tax, I have charges on electricity, gas and

Majesty's Government.

have received that certain of these listened with great interest to my. telephone accounts.

SIMPLEST METHOD

works will not be commenced Unoficial colleagues' remarks, and Finally, the simpleat, and to without further reference to the to the very able reply of the Hon- many people the most attractive. Finance Committee. method is to put it on the rates.

ourable Financial Secretary who, in That is certainly administratively ble not to be alarmed at the ever-mg the transfer of staff that I At the same time, it is imposal-spite of the disabilities surround- practicable and the primary ob-increasing cost of Government have just alluded to, has in some The cost of a customs depart-jection to it is on grounds of which in my view must continue miraculous way arrived here, and ment would certainly not fall short equity. It is suggested by many to Increase unless there is of that of an income tax depart people that the addition to the radical change in the principles carrying out the duties of a new if I may say so, is most efficiently ment, and I am sure that I should rates would be borne by the pro- laid down for conducting the Co-broom. have the support of all the big

lonial service. business.houses in saying that the

He is now quite rightly bent upon. introduction of inch a tariff and

A system which renders it almost sweeping up some of our hard- Impossible to dismiss an unsatis-earned incomes in order to devote the multiple restrictions its col-l

factory servant, and which adheres them to the prosecution of the lection would entail would do

tenaciousty to the practice of pro- greatest of all causes, but he pro- more damage to. Hongkong trade,

motion by seniority, is bad enough poses to use a type of broom that above all to its entrepot trade,

but when to this is added the some of us don't consider suited to than any income tax

inequality of the terms of service the interests, of the Colony. in the different Colonies, which

As one of the business mess renders most difficult the very originally consulted with regard to desirable transfer of staff from one the imposition of Income Tax, I Colony to another, the Government would say at once that, my opposi in my judgment is saddled with

tion to it did not arise until I later" three disabilities

discovered ...the serious objections speedily ruin any ordinary business on the part of the Chinese com concern.

Įmunity, who represent such a large

proportion of our population.

LITTLE MISLED

It is a very important addi- tional defect of a general cus- toms tariff that it necessarily taxes people according to what they spend, not according to what they receive; and it therefore bears more heavily on the poor man whereas I think we should all agree that any new, tax to be imposed should bear more heavily on the wealthier members of the community.

perty owner.

•

I confess that it seems to me unfair that he should be ex- pected to" pay the whole sum required, while recipients of large incomes from other.

· SOURCES. Sre to be allowed to escape scot-free, and at the same time it seems to be far more likely to prevent further investment of capital in the ::: Colony, if it really is, the CASE ...that, the property, owner would -pay.

..::.. RADICAL, CHANGE

In fact, however, I believe that a large part of such an increase in rates would be passed on to the

As Your Excellency is possibly occupier, Le, once more in the aware, I have protested before now. I was also a little misled by the main to the poorest class of the in this Council against the Gov-fact that my Honourable friend, community. Moreover any increase ernment's policy of purchasing Mr. M. K. Lo, signed the Tax Com- That point bad been very in the cost of I'ving accommodation practically all their supplies mission's report, which, in spite of strongly urged by the Secretary will merely help to perpetuate the through the Crown Agents for the its qualifying remarks about Income of State. Precisely the same ob- dreadful conditions of overcrowd-Colonies, and very little through Tax, I should hardly have expected -jection -applies to the suggestion ing which we all deplore.

-

of a sales tax, whilch in addition

I should expect to be peculiarly

GENERAL OBJECTION

the local merchants who carry on him to do in face of the very the Colony's trade. The Govern- decided views he now expresses. ment's reply is that the purchase I am at one with the Financial susceptible of evasion and parti- The general objection on all of all Colonial supplies through one Becretary in repudiating the idea. cularly expensive to collect since it these alternatives is that none of central organization is an economic that the Colony's trade has suffer- would involve detailed scrutiny of them approaches an income tax in and bustnesslike procedure, and ed during the last two years. It the accounts of all businesses in the extent to which it can be ad- one which is adopted by all bual has been quite abnormally pros- cluding those innumerable small justed to the capacity to pay of ness concerns with branches perous, but is now showing very shops whose profits would be too the individual, and, therefore in abroad. Tow to bring them within the pur- fairness of the distribution of the view of an Income Tax depart- necessary burden of taxation, ment

In that connection I suggest

distinct signs of dwindling. During

In many respects I agree that the last war, Hongkong's trade thla answer is unanswerable, and beneated rather than the reverse, am quite prepared to withdraw my but there is so much Government