HC Deb 14 November 1934 vol 293 cc1936-8
4. Mr. NUNN

asked the Secretary of State for Foreign Affairs what is the position of British subjects in China who have had demands made upon them for the payment of local Chinese taxation: whether such demands are made only upon British subjects; and whether the Chinese authorities have been in communication with the British Government upon this matter?

5. Lieut.-Colonel Sir WALTER SMILES

asked the Secretary of State for Foreign Affairs whether he has any information to give the House with regard to the imposition in China of a business tax on British companies operating in that country?


asked the Secretary of State for Foreign Affairs whether, with regard to the complaints which have been received from British subjects in China with reference to demands by the Chinese authorities of Shanghai for the payment of local taxation and which demands are not legally enforceable upon British subjects, he will make representations to the Chinese Government on the matter?


asked the Secretary of State for Foreign Affairs whether his attention has been drawn to the attempted imposition by the Chinese local authorities of a business tax upon British subjects in Canton; and whether any action has been taken by the British consulate to assist in opposing this demand?


Demands for the payment of Chinese taxation are not legally enforceable against British subjects unless the regulations imposing the tax have been made binding on British subjects by King's Regulation made under the China Order in Council, 1925. Certain taxes, as for example customs duties or land taxes, are, however, for obvious reasons, generally paid without any King's Regulation on the subject. Demands have recently been made on foreign nationals, including British subjects, owning property in the area administered by the Chinese Municipality of greater Shanghai for the payment of a land values tax. As this tax is legal under Chinese law, non-discriminatory, reasonable in amount and generally paid by Chinese, British subjects have been advised that effective support cannot be guaranteed to them in the event of their getting into difficulties with the Chinese authorities through nonpayment of the tax.

A law imposing a business tax was promulgated in 1931 and provided inter alia that the tax was to be considered as local revenue and that the rates were to be determined separately by the various provincial or municipal Governments. Since that date demands have been made at various places, including recently Canton, for the payment of the tax, but, as the regulations in question have generally been of a vexatious and unpractical character and have contemplated unfair and irregular methods of assessment and enforcement by arbitrary executive action rather than by recourse to due process of law, British merchants have resisted payment and have been afforded the fullest possible support in that attitude by His Majesty's Consular and Diplomatic representatives in China.


May I ask my right hon. Friend whether this system by which the person who is called upon to pay the tax has to decide whether the tax is reasonable or not does not place that person in a rather impossible position; and if the Consul is frequently asked to decide the question of reasonableness, is it not possible that a certain amount of acrimonious dispute is likely to arise between the Consular authorities and the Chinese authorities?


As my hon. Friend knows, it is a most difficult and delicate subject. I have given him a carefully considered answer, and I should not like to go beyond that at the moment.

Major-General Sir ALFRED KNOX

Are we to understand that, while His Majesty's Government allow that this taxation is illegal, they are not prepared to support British subjects who are resisting payment?


I do not think that when my hon. and gallant Friend has read the answer he will be able to construe that from what I have said.


Can my right hon. Friend say whether the Japanese merchants are paying this tax?


I must have notice of that question.