1939-11-09 — Page 23

M

Thursday,

HONGKONG TELEGRAPH

November 9, 1939.

cer

KOSTTAVOLZE:

UNOFFICIAL COUNCIL MEMBERS PRESENT FORCEFUL ARGUMENTS AGAINST INCOME TAX

UNANIMOUS OPPOSITION TO

GOVERNMENT'S PROPOSALS

ADMINISTRATION COST CRITICISM Members Warn Against Rising Tide Of Expenditure In H. K.

UNEQUIVOCAL OPPOSITION TO GOVERN- MENT'S PROPOSALS FOR THE INTRODUC- TION OF INCOME TAX WAS EXPRESSED BY UNOFFICIAL MEMBERS AT THIS AFTERNOON'S MEETING OF THE LEGIS- LATIVE COUNCIL.

ALL EIGHT UNOFFICIAL MEMBERS SPOKE ON THE SUBJECT AND OPPOSED THE MEASURE.

THE CONSENSUS OF OPINION is summED UP IN THE SPEECH BY THE SENIOR UNOFFICIAL MEMBER, HON. SIR HENRY POLLOCK, WHO SAID:

"In the opinion of responsible business men of this Colony, ~ the imposition of Income Tax would be a disastrous form of

taxation to adopt.

"It is the unanimous opinion of the Committee and Members of the Chinese Chamber of Commerce that they are not in favour of the introduction of Income Tax in this Colony.

"My Unofficial colleagues on this Council are unanimously opposed to Income Tax.

"I confess that I find it very difficult to understand what justification the Government has for proceeding with the con- sideration of an income tax bill in view of the fact that these British and Chinese experts have unanimously express- ed in opposition."

Sir Henry Pollock also expresses the conviction that it would not be prudent finance to make an annual contribution to the Imperial Government of $3,000,000, in addition to the $6,000,000 per annum which we pay for our ordinary Military Contribution and other defence expenditure undertaken by the Colony.

Only slight opposition is expressed by Unofficial Members to the ordinary Budget, which is the highest in the Colony's his- tory.

The Hon, Mr. T. E. Pearce suggests curtailment of expendi- ture in the Medical Department, and warns that the question of Civil Service pensions is rapidly getting out of hand.

The Hon. Mr. Li Tse-fong, complains the lack of provision |

for the

education of Chinese

children, and to the total lack of provision for Air Raid shel- ters for civilians.

„Lot-Us-Beware.........

Future governments, says the, llon, Mr. A. L. Shields, may be caused! much heart burning and anxiety if the burden of expenditure and cost of government

not carefully watched to-day.

"Let us beware," he said, "Test we find ourselves with tile to offer but security, Let us look over our stock in trade and see what else we have to offer."

The Hon. Mr. Ļ. D'Almada claims; that it Government, by use of its offiatal majority, imposes upon the Colony a form of taxation tgalist which the representatives of the people have expressed themselves 20 strongly and so unequivocally, "it would be a sad commentary indeed on rule by the people."

The epithet "astronomical" is more apt to-day regarding administration costs than ever before, he says.

"Killing The Coose"

One of the most

comprehensive

speeches was that made by the Hon.

Mr. M. K. Lo, who covered the en-

HON, SIR HENRY POLLOCK

NOT PRUDENT FINANCE

Senior Member Seeks Colony's Welfare

Hon. Sir Henry Pollock Your Excellency,-I have no com-

tire field of economics and finances inents to make on the Budget for

in

his condemnailon of the existing 1040-41 system.

He insists thut the method of taxu-j

of

aj

tion employed for the purpose raising the funds necessary. for contribution to the Imperial War Chest should, like the contribution) Itself, be spontaneous and free, and warns against the risk of "killing the Koose."

No scheme of taxation for this pur- pose, says the Hon. Mr. T N. Chou, will be attacked by Hongkong resl- dents, either Chinese or European, on the ground that it inflicts hard- ship or strain on any portion of the community.

.:

In regard to the proposed War

Gift to the Imperial Government,

гол

are.

10

coat pay for our ordinary Military Con- bable

Government of tribution and to the sum of nearly administration of Income Tax, but, 24 million dollars in respect of De- no consideraton seems to have been fence and Special War Expenditure glyen to the additional cost of book- for 1040-41.

keeping, records, legal advice, char- My reasons for holding this opinion tered accountant's fees etc., that will have to be borne by any business in 1-That-nobody can foretell how order to comply with the require-

long the present war will last,ments of the Tax. and therefore, that we are nat

Ceylon No Comparison Jualified in mortgaging our We have been told that Income Anancial future for an in- Tax is enforceed in Ceylon, but, with definito period of time by nil due deference, that fact is wholly sending out of the Colony - Irrelevant, as conditions there are so nually more than three million entirely different from those existing dollars.

in this Colony.

2. That the total amount required to be voled eventually to com- plete the following items in Pubile Works Extraordinary for 1040-41, namely, items 11. 14, 15 19, 21, 22 and 23, is over three million three hun- dred thousand dollars, whereas: the amounts now being voted for commencing those” works

dred and Afteen thousand dollurs.

ather Unofficial Members.

HON. MR. S. H. DODWELL

that

hayo no desire nor intention to evade.

Only two considerations weigh with the Committee: firstly, will the intro- duction of Income Tax drive Chines0 industrial enterprise and capital away from the Colony and prevent. fresh capital and Industries coming to It and secondly, will not the' organi- sation for collecting it prove too costly?

The Committeo's answer to bolh these questions was in the affirma÷ tive.

We attached little importance to the danger of industrial enterprise being driven away from the Colony, for the simple reason that most of it derives | considerable benest from Imperial Preference, but sve came to the unanimous conclusion that the risk of a flight of copital was a very reat one which should not be taken if our war contribution could be collected in some other way...

In our position as a storage, diz- tributing, and Ananeing centre, with |no mineral or agricultural wealth to speak of, we are on an entirely different fooung to Ceylon and other have intro- Crown Colonies which duced Income Tax. Our trade is very largely dependent upon cheap money.

I fear that Your Excellency in your desire for this Colony to make a contelbuilon towards, the j War Gift to the Imperial Govern-|| ment, has not quite appreciated would speedily ruin any ordinary those serious objections to Income business concern. Tax which I have indleated and

Purchasing Policy which will no doubt be stressed by As Your Excellency is possibly In my

own experience it has aware, I have protested before now suffered very seriously on many no- It is hoped, however, that Your in this Council against the Govern-casions before from flights of capital, total no more than two hun- Excellency who, in the course of ment's policy of purchasing practice when interest rates have risen to 7 Band your two years administration afully all their supplies through the per cent. and 8 per cent. and serious- The big difference this Colany, has earned the thorough- Crown Agents for the Colonics, and between the above amount y' well-deserved reputation of beingį very little through the locul mer-y affected all industry and trade. will have to be made up by

on the Colony's tax payer in future Bud- able to consider every side of a chants who carry the

rets unless we

are to leave question, will, with the same im-trade.

The Government's reply is partiuilty, consider the arguments. Uose Works in a state of sus which are now being urged against the purchase of all Colonial supplies pended animation for the

the imposition of Income Tax, to through one central organisation is wholly unknown and uncer gether with the suggestion that al-an economie and business-like pro- cedure, and one which is adopted by ternative inxes be imposed.

all business concerns with branches abroad.

In many respects I agroo bat this answer is unanswerable, and I am quite prepared to withdraw my opposition to the policy, if only the Government would be business like in all directions, Some radical change in regard to the three disabilities I have mention- ed seems essential, and would so in- I have been informed, however, by crease the efficiency of the whole does not mean that the members of staff and overhead would result. the Government, that that remark service that substanual reductions in that particular Committee are to be

Lain duration of the wor.

3. In his speech in this Council on the Budget, on October 12, the Honourable the Financial Secretary said:

Restricted Reference Your Excellency has recently op- pointed a Committee to go into de-1 "In preparing the final draft stalls of the Income Tax Bill proposed number of items of new expendi by Government, and I understand ture which it had originally been that, in that letter of appointment,] desired to include were deleted it was stated that Government was in order to avold budgeting for "willing to give full consideration to any substantial defclt in the un- certain circumstances which lie alternative

revenue." before ux."

Important Admission

incthods of

raising

at liberty to suggest any alternative Wrong Type Of Broom

methods of taxation.

Ότι

effect. personally

HON. MR. T. N, CHAU

tunately

comes from

source which we have all learnt to regard As committed, "as

a matter of policy, to`ystematic distortion. As representing the Chinese com- munity, and by that I mean not only those whose loyalty arises from their Dangerous Experiment

British birth but all who have en- In the light of the strenuous op Joyed for either longer or shorter position of our Chinese colleagues periods the privileges of citizenship who fear that I will have this

in this Colony, I have to refute in feel that IR H

The most unequivocal terms that such might be a dangerous experiment. This may seem strange advice from position, as had already been

voiced

against the Introduction of no way Company to registered at income tax, is associated with phy Home, pays Home Income Tax and unwillingness to share in full men. Excess Profits Tax, and on this

ac-sure whatever ancrifices which are count was at a serious disadvantage during the last wor. Nevertheless, it being claimed from all citizens of

the British. Empire. is my considered opinion, unless we can get over the Chinese objections.

I recognise that none of us slrovid rightly pass final judgment upon the subject until the Bill is before us and we know its terms. The Com- mittee now sitting may succeed in devising some method of making less objectionable to our friends. Under their terms of reference it is

it

almost cer-

Desire To Holp

I go further, and say that far from the adoption of any hesitant attitude towards the raising of a special war contribution by this Colony, it is the general desire of the Chinese community to see that in due course each

contribution be made and in a manner which will be worthy of and do credit to

the loyalty of all sections of the community of this Colony,

The Chinese community is far from being Insensible of the urgent and special Onancial needs of the Colony,, and they realise that these call for consideration of new methods of raising revenue.

Fraught With Difficulties

That statement of the Financial Secretary I regard as an important admission that certain desirable items of expenditure were excluded from

With regard to this much vexed difficult to see how this can be the Budget because of the "uncer-

Accordingly. I lain circumstances which ́ile before)

venture to suggest question of Income Tax, I have list-achieved, but if it can, then the main that Your Excellency should now ened with great interesit to my Un-objection I have to Income Tax will us."

Nobody who is acquainted with the appoint a Committee for the purpose official colleagues remarks, and to disappear.

Cost Of Collection of considering

methods to the very able reply of the Hon. Alternative pute that there are many other public the War Gift to the Imperial Gove the disabilities surrounding the transerious consideration before circumstances of Hongkong will be income tax for raising revenue for a secretary who, in spite of There is another point which needs setting works which we would like to have

ernment

that Committee Ifer of staff that I have just alluded up an expensive collection depart curried out if Anonces permitted. should be glad, if consklered eligible,rived here, and it I may say so, thoroughly, I fear will

1b, has in some miraculous way arment, which, if it is to do it work This seems to me a very strong to serve. argument not only ngainst our send-

most efficiently carrying out

The opposition to the introduction the tainly cost more than the four Inks of Income Tax, which it is my duty ing home as a War Gift a sum of

Some Alternatives

duties of a new broom.

mentioned by the Hon. Financial to emphalse, is based on the firm more than free million dollars but

That Committee would, no doubt, He is now quite rightly bent upon Secretary, also a very strong argument against be able to recommend many suttable sweeping up part of our hard-earned

conviction that its practical implica- I doubt if the Government really tion is the Imposition of a tax like income alternatives to Income Tax.

incomes in order to devote them to appreciates how large a proportion that it will not only fall in its object so fraught with dimeuitics, Tax, which

In the meanwhile, I suggest some the prosecution of the greatest of of the tax, If appiled throughout the but may bring in its train repercus will seriously upset

alternative Chinese capitalists and industrialists possible

methods of all causes, but he proposes to use a Colony, would have to be refunded sions and complications in spheres in this Colony.

taxation, which have the merit of type of broom that some of us don't by the Home Government. being easily collected, at smail ex- consider suited to the interests of the

which might not normally be associ I estimate that six large British ated with the collection of revenue. Pense, and of being widely Colony.

also

concerns, apart from the purely Where the dificulties with which spread, such

As one of the business men origin- local limited companies, would con- we 115: A percentage on every electrically consulted with regard to the im-tribute a very substantial proportion nature I would consider any form of are faced only of a practical Hight and power bill.

position of Income Tax, I would say of the tax collected from "European opposition which did not attempt to A percentage on every gas bill at once that my opposition to it did British companies, and the great offer any

not arise unt! I later discovered the majority of their shareholders are inadequate.

solution as being in- serious objections on the part of the the United Kingdom. Chinese community,who representFinally, Sie: I realise only---too such a large proportion of our: population.

A few days ago I visited the Kwang Wah Hospital and found that it was badly overcrowded, with, in some cases, two patients occupying the same bed. Also I found over 200 patients quartered in four matshed; In the grounds, who are exposed to serious danger in case of fire,

In these circumstances It is obvious that more hospital accommodation for several hundred patients ought to be built as soon as possible, involving a probable expenditure of about twe million dollars.

ters

I am confident that Your Ex- cellency, who has Public Health mat- in this Colony so much at heart. Will

that this is a responsibili #gree ty which rests upon the Government and that these new hospital bulidings ought to be erected 05 soon possible.

Non-Riskable Taxation

as

A percentage on every telephone

BIL

The rising of the annual liecuce fee charged for wireless sets, A tax in cinema and theatre

tickets.

I was also a little misled by the The Institution of a special War fact that my Hon. friend, Mr. M. K. surtax on the assessed rateable Lo, signed the Tax Commleston's value of

of property.

report, which in spite of its quality-

The collection of a percentage Ing remarks about Income Tax, I on dividends from investments should hardly have expected him to In Publio Limited Companies do face of the very decided views in Hongkong.

he now expresses.

On behalf of all the Unofficial | Members of this Council, I desire to

Dwindling Trado

well that opposition to Income Tax at the present moment sounds ex- tremely unpatriotic, no doubt part- cularly so to my Hon. friend the Acting General Oficer Command- ing, and the Serviors generally, who pay their 78, (d.

Gladly Contributo

So far as the European Britons in the Colony are concerned, I am con- Adent that they are fully prepared to

war.

But as I am convinced that this revolutionary method of raising re- venue in this Colony is going to place us in a position where not merely the

but prosperity

Ulte whole financial structure many be imperilled, I must deprecata oven prolonged considerations directed towards solving the various prac- leat difficulties, many of which have been already voiced by public bodies and in the Press,

I feel that in considering the ques tion of Income Tax in this Colony, where the Chinese business popula-

་

state that Income Tax is in our Secretary in repudiating the idea matter and that all would gladly makution predominates, we should exer-

I am at one with the Financial accept their responsibility in this opinion, detrimental to the future that the Colony's trade has suffered their contribution through the medium I now pass on to the main eme Excellency to appoint a Committee been quite abnormally prosperous, reasonable allowances ore mode, and might describe as "psychological"

of this Colony, and to request Your during the inst two years, It has of an Income Tax, provided that but more particularly of what

cise a sense, not merely, of scientifle, of my speech, which is Diat, for the purpose of making a gift to the natives to Income Tax, for the special signs of dwindling.

to consider and report on alter but is now showing very distinct that the tax is for the duration of the Imperial Government, other taxes purpose of raising revenue for the

economics, which would not involve the risk of War Gift to the Imperial Govern injuring the trade and prosperity of this Colony ought to be substituted ent

It is my earnest hope that a just Income Tax. In the opinion of responsible busland wise solution of this taxation ness men of this Colony, the imposi-problem may be found and that what

ought to be tion of Income Tax would be a die- this Colony will go Home with the free-will offering from astrous form of taxation to adopt, cordial and unlted assent of every for it is the unanimous opinion of Member of this Council. the Committee and Members of the Chinese Chamber of Commerce, that) they are not in favour of the institu-j tion of income tax in this Colony.

Unanimous Opposition

My Unofficial colleagues on' this Council are unanimously upposed to Income Tax.

NEW BROOM NEEDED

I

During the last war, Hongkong's From what my Chinese colleagues trade benefited rather than the re-have said, it is clearly not the pay fact that the introduction of Income

Always Failed We are faced by the undeniable. verse, but to-day there is so much ment of the contribution to which they Government control of Imporis object, but to the method of its Tax In in wholly or predominently and exports and exchange, not an collection.

Chinese community has always mach here as in other parts of the world, and so much uncertainly of a flight of capital may prove an

Conceivably, of course, the danger proved a failure and as, obviously, there is a reason for this which about the effects of the Sino- exaggerated bogey.

might be easily ascertained or, on Japanese conflict, that it is im-. We undoubtedly have a magnificent the other hand, evade the most possible to form a reliable opinien harbour and many attractions and vigilant inquiry, it is my view that facilities to counteract the imposition without an answer to this question, In these circumstances I feel that of the tax, but from my thirty years an answer which would enable us to it is an unpropitious moment to em-experience of how little it takes to distinguish conditions in this Colony bark upon

doubtful experiment. upset the delicate economic equili- from countries where the experi- The Financial Secretary has alluded brium of this Colony, I am con- ment has fatted, we are not justified to the success which has attended the vinced that there is a grave element in proceeding with the matter. Imposition of Income Tax in other at risk, and that, in view of the

about the future.

I confess that I find it very dim- Afarm. At Rising Costs and particularly mentioned dificulties of trading we are likely

Of Government

It is known with what Hitta mue...). cent -the attempt" tõ' introducë: In- come Tax In hïalaya, bas met, but what is atul, more important is the evidence from China tacit where! the Income Tax Laws, which had

be, an

the Dutch East Indies, where theto have to contend with, it is one wo Chinese are apparently paying up should not take unless the Committee without demur. His reference to now in session can make, the Bill [burglars reminds me of the well-palatable to the Chinese community been most carefully worked out,

of

as a resident of the Colony for 51 years, during 20 years of which cult to understand what justification time I have served as a Member the Government has for proceeding of this Council, I make no apology with the consideration of an Income for treating tho making of this Tax bill In view of the fact that

Hon. Mr. S. H. Bodwell

known incident that occurred not so gift from the point of view of the those British and Chinese Experts Your Excellency-Though the Bud Chinese merchant in Java who for

many years ago, welfare of this Colony rather than have unanimously expressed them-

the wealthy the point of view of contel-selves as being opposed to Income get before us to-day is a heavy one years had been getting away with buting what must, whatever actual Tax.

considering the world situation, the return of 10,000 guilders a year, annual sum in dollars is remilled;

explanations given to the Select Com-when his income was probably in the Anybody who understands the mittee have satisfied me that it would region of a million. to the Imperial Government, be ni

mentality of the Chinese must mere mite in the War

Var Expenditure

realise that such a measure as I be false economy not to proceed with

The tax collection department st the Public Works

Extraordinary last in desperation raided his office come Tax would be likely to cause

flight of capital from the programme, unless our revenue shows and seized all his books.

įsigns of a serious decline, Colony and to prevent new temli-

Should this occur, the contingency tances from being made to Hong-

satisfactorily kong and also that it would pro-assurance we have received that cer

covered by bably deler new factories and on-tals of these works will not be com terprises from starting here.

menced without further reference to the Finance Committee.

of Great Britain.

He expressed the opinion, kawever,j

In taking this view I am supported; that Income Tax would defeat it by the Right tion. the Secretary of

own object.

7

State for the Colonies who clearly,

the

and wisely, told us that "there should The Hon. Mr. S. H. Dodwell ex- be as little disturbance as possible pressed alarm at the over-increas with the Colony's current activities Ing cost of Government which, to and development schemes, so long us In connection with this latter point his view, will continue to increase revenue to finance them would be I may mention that I have been in- unless there is a radical change in forthcoming,"

formed recently that certain Chinese, the principles laid down for con It in our duty, therefore, in this who had intended to start steci- dueling the Colonial Service. In- Council, in considering the amount works in this Colony, have, since las come Tax, he said, would be uf dollars to be remitted to the Im-come tax was mooted, abandoned the dangerous experiment.

perial Government as a gift, to look idea, tem Whilst

the

༥

Ho promptly engaged an adept burglar," who stole the books from the collector's office "and: burni them

nd damages.

MR. T. N. CHAU'S WARNING

Interference With Tradition

have proved to failure almost from the their institution.

absolute

time of

in

I do not think it necessary for me to put forward any theorles for these: failures, but I do repent that a very.. clear explanation: should be-the starting point and not an incidental matter for our own delibérations.

The Taxation Committee pointed by Your Excellency Hon. Mr. T, N. Chau

October, 1930, had alrendy, as I will Sir:As the draft estimates of admit, a background of very abnor He then sned the Government expenditure for 1940-41 have been mal conditions in this Colony, arising for the low of the books and obtain-carefully considered by the Select which had then been in progress for out of the Sino-Japanese hostilities. At the same time, it is impossible

Committee, 1 personally have no ob- not to be alarmed, nå the over-ins

That, however, may be an isolated servations to make on the ordinary over a year. creasing cost of Government, which case and in the event of Income Tax budget.

That part of their Raport which in my view-must: continue to in being introduced, I hope my honour As regards the war budget. It is deals with Income Tax cannot, grease units there a radical able falend will not have to resort to first of all my duty to the Chinese entirely the unusual commercial and therefore, be said to have ignored change in the principles laid down such drastic measures.

community to dispel any impression ahead beyond the immediate present, Other objections to Income Tax

for conducting, the Colonial service. Chamber Of Commerce unanimously opposing and to conserve our resources for are that it would involve the troubla

which may have got abroad that the financial situation A system which renders it almost I would like now to contradict the motive behind any opposition that existed and might continue for an Were Cauzily unache Members current activities and development and expense of having numerous impossible to dilatniss on unsatisfac impression which seems to be cireu has been publicly or privately ex- Indefinite period a

equally unanimous that the schemes."

Chinese account books translated into tory servant, and which adheres lating in the Colony that the Com-

pressed to the institution of a tax Colony desires to make large-sosie, NYAN

Nofa Of Caution meriflora.. for the purpose of as

Engilsh, and that its collection would tenaciously to the practice of promo-mittee of the Chamber of Commerce, on income reflects any reluctance to It is however, worthy of note that Not Prudent Finance. alating the Imperial: Government

involve the employment, at consider tiun by seniority, is bad enough, but of which I am one, was neither in raise a special capital contribution to in furnishing replies to a number of In its war against: Naalism

I am convinced that it would not new Goverment officials, and that of the terms of service in the different the Imperial War Chest, nor of paying Government

able public cost,. of a large staff of when to this is added the inequality favour of making any contribution to the War Funds of the imperial practical/difficulties fuather: Institu= on of Income Tax relating të ques- Each member stressed that op- be prudent finance to make an ah- the Chinese have strong objections to Colonies, which renders most difficult Income Tax themselves Ther suggestion that the com- tions which the Curmitted itàvil: rugi position was not 16% financial nual contributor to the Imperial their private family, and bulness the very desirable transfer of staff Nothing could be further from the mente: or, even criticism, however zalied, avery strong note of caution sacrifices". bat to the manner Government of a larger sum" than affairs halog pried into Government proposed to call for $3,000,000, d addition to the $6,000

ames from one Colony, to another, the truts, The Committee was unant, strona, might be constrund Hero was sounded, and 1 daires to Avala In the Taxation Committees Government in my judgment is motary in favour of substantiaevealing at kigge genera filatitude of particulari až to vicaria la pluralindirler 000, berg annum which we have to Report, mention is made of the pro saddled with three disabiliter which contribution, their share of which they antagoniam byl t

which then