§ 67. Mr. Errollasked the Secretary of State for the Colonies what is the position regarding the introduction of Income Tax in the Malayan Union.
§ 79. Sir P. Macdonaldasked the Secretary of State for the Colonies whether, in advising the Governors of Singapore and the Malayan Union to impose a Company Profits Tax, he took account of the urgent need for the rehabilitation of the principal Malayan producing industries, such as rubber and tin; and whether, in view of 200W the difficulties with which these industries are faced and the fiscal burdens which they already bear, he will urge that the present Ordinance should be amended or withdrawn.
§ 83. Mr. Gammansasked the Secretary of State for the Colonies for what reason he authorised the Governors of the Malayan Union and of Singapore to impose Income Tax and Profits Tax in spite of the majority vote of the Advisory Councils to defer a decision until the Legislatures under the new Constitution meet early next year; and at what levels taxation is being levied.
§ Mr. Rees-WilliamsThe considerable pre-war financial reserves of the Malayan Governments are practically exhausted and budget deficits are again expected in 1948. It is clear that Income Tax is the only practicable and fair method by which additional revenue can be raised in the immediate future to meet war liabilities and provide adequate social services. Accordingly the two Governors after carefully considering the arguments put forward in the Advisory Councils and after consultation with the Governor-General, and with my right hon. Friend's approval, decided that there was no alternative but to introduce Income Tax as from 1st January, 1948. The legislation provides for a 20 per cent. tax on companies' profits and a sliding scale of tax on the chargeable income of individuals, which after allowing for certain reliefs, will result in a minimum rate of tax of 3 per cent. and a maximum rate of 30 per cent. The two Governments are considering certain modifications in the legislation, including the grant of relief in respect of expenditure on rehabilitation, and if necessary amending legislation will be introduced. I attach copies of the statements which were issued by the Governors of the Malayan Union and Singapore on 4th and 5th December.
The following two statements were issued on 4th December regarding Malayan Union Income Tax:—
First Statement
His Excellency The Governor of the Malayan Union has most carefully considered the proceedings in the Advisory Council on the Income Tax Bill which has recently been debated and, after consultation with His Excellency The 201W Governor-General, he has come to the conclusion that this is a case in which he considers it right to act in opposition to the advice given to him by the majority of the Members of the Advisory Council, and has accordingly enacted the Bill under the powers conferred upon him by Sections 85 and 86 (2) of The Malayan Union Order in Council, 1946.
Second Statement
Today is published the decision of His Excellency The Governor to enact the Income Tax Bill after careful consideration of the advice given to him by the majority of the Members of the Council against such enactment, and by the minority of the Members in favour of enactment. Before taking his decision, His Excellency The Governor fully considered in consultation with Their Excellencies The Governor-General and The Governor of Singapore the whole question of Income Tax and arguments expressed in relation to it. The Government is convinced that, while effecting every practicable saving and following the policy of true economy now and in the future, fresh and considerable revenues will be necessary, both for immediate and long term purposes, if the progress and development of the country is not to be halted. Fresh conceptions of the duty of a public administration to promote social justice in its widest sense have been accepted throughout the Commonwealth and other progressive countries.
Moreover, at this crucial time in the moral and material rehabilitation of Malaya from the devastation of her war experiences, it would be no true economy, but rather a calamity with lasting effects, if the necessary scale of expenditure for reconditioning and expanding the Education, Agriculture, Irrigation, Health and other services were stopped unless it were clear beyond all doubt that revenues could not be provided to meet those essential needs and to preserve the country and her people from falling back to more primitive conditions. It cannot yet be closely estimated what revenue can be relied upon from Income Tax, but it can be expected that it will be considerable in 1948 and, as departmental experience is gained, it can be estimated with greater accuracy in future years. Its yield will partly depend upon the willing co-operation of the people in a full sense of their social duty and a full appreciation of the 202W importance of a progressive social policy; by no other policy can the majority of the people be honourably served by the administration. In this belief, the Government confidently trusts that the decision which has been taken in respect of Income Tax will now receive acquiescence and support throughout the country, and that all will join in the determination to see that its operation shall be fair and fruitful. Certain modifications of the Ordinance are under immediate consideration, which are designed in the public interest to assist the rehabilitation and the development of important classes of industry and, if necessary, an Amending Bill will be introduced for this purpose.
The following statement was issued on 5th December regarding Singapore Income Tax:
His Excellency the Governor has carefully considered the advice tendered by the majority of the members of the Advisory Council in the course of its debate on the Income Tax Bill on 27th November. It is considered policy of the Government to raise the standard of living of the people of the Colony by the provision of adequate medical, housing and educational services. This policy requires not only plans by the provision of the necessary funds over a period of years. It is financially unhealthy to embark on schemes covering a number of years with an unbalanced budget, with an increase in the loan debt of the Colony and without assurance of regular income for some years ahead. A balanced budget is essential both to ensure the success of the Government's policy and to assure the high financial credit of the Colony.
After weighing carefully the arguments put forward by the members of the Council in opposition to the immediate introduction of Income Tax and re-examining the financial position in the light of the proposals they put forward, the Government has not been convinced that there is any practicable and immediate policy, other than Income Tax, which can be adopted in the light of its responsibility for the good Government welfare and commercial standing on this great port and colony.
His Excellency the Governor has therefore decided that he has no alternative but to enact the Bill under Clause 40 (1) of Singapore Order-in-Council 1946 203W to allow revenue to be collected from this source at an early date.
The Government is however considering certain modifications of some sections of the enacting Ordinance, including the grant of relief in respect of expenditure incurred in 1947 on rehabilitation and hopes to introduce an amending Bill before the end of December.