INCOME TAX (AMENDMENT) BILL

Order for Second Reading read.

Mr T. M. Hart: Sir, I have His Excellency s permission to move, "That the Bill be now read a Second time."

This Bill has four principal aims: firstly, to assist the mining industry in Malaya; secondly, to afford an additional measure of relief to the rubber industry; thirdly, to simplify the provisions for the assessment of income from dividends; and, lastly, to enable the Comptroller to obtain a full disclosure of a person's total assets.

Clause 3 is intended to give effect to the first aim. It is introduced in order to encourage the search for fresh mineral deposits in Malaya. Under the existing provisions of the Income Tax Ordinance, relief is allowable for moneys expended on the search for mineral deposits only where such expenditure is incurred; firstly, by a miner within the area of his existing lease, regardless of whether the prospecting is successful or otherwise; secondly, where the prospecting is successful and mining operations follow; thirdly, by a person carrying on a trade or business of prospecting for mineral deposits. The expenditure for which the present provisions of the Income Tax Ordinance do not give relief is expenditure on unsuccessful prospecting incurred outside the area of a miner's existing lease. It is considered that if relief for income tax purposes is given in respect of such expenditure, the discovery and development of the mineral deposits of Malaya will be assisted. The clause is designed to give such relief. It will be seen that, to qualify for relief, the prospecting expenditure must be lawfully incurred. This restriction has been inserted to ensure that only persons who are duly authorised to engage in prospecting shall be in a position to claim relief for their expenditure.

With regard to the next aim, hon. Members will remember that one of the recommendations of the mission of enquiry into the rubber industry - the Mudie Mission - was that all new capital expenditure on estates should be written off for income tax purposes over a maximum period of ten years. Clause 4 is intended to implement that recommendation. The relief which may be claimed under the provisions of clause 4 is available to any person engaged in working a plantation. The word "plantation" is defined in Section 2 of the Income Tax Ordinance to mean any land used for the growing and harvesting of crops, and, accordingly, the relief proposed is equally available to the rubber, oil palm, rice, tea and cocoa industries.

Qualifying expenditure will be divided into ten equal parts, and will be available for relief for each of the ten years of assessment following that in which the expenditure is incurred. Paragraph (3) of the clause makes provision for the allocation of the relief as between the vendor and the purchaser where land is sold, on which qualifying expenditure has been incurred. Thus, if the whole or part of an estate is sold within any ten-year period, the purchaser is entitled to claim, over the remaining years of the period, the same amount of relief as was allowed annually to the vendor, provided that the estate or part of the estate purchased continues to be used as a plantation. The relief afforded under the clause is generous, and it is considered reasonable that where the whole or part of an estate in respect of which relief has been given is sold or transferred for a consideration, the vendor should pay tax on any sum which he recovers in respect of his expenditure.

The proviso to the clause introduces two safeguards for the taxpayer where the whole or part of an estate is sold. Firstly, the sum recovered on which the vendor is required to pay tax is restricted to the amount of the allowances which he has obtained under the clause. Secondly, the taxpayer is given the option of having any sum so recovered treated as income of the year of receipt, or spread evenly over such of the previous years of assessment as are in date for additional assessment.

Paragraph (2) of the clause provides that capital expenditure on the acquisition of land, machinery and plant shall not qualify for relief. In the case of machinery and plant, the existing rates of depreciation, which have been prescribed by the Malayan Board of Income Tax, are considered to be adequate, but Section 19 of the Ordinance gives any taxpayer, who is dissatisfied with these rates, the right to approach the Comptroller with a request that higher rates should be allowed. Land used as a plantation is not considered to be a deteriorating asset and, for that reason, is excluded from relief under the clause.

A few words on the provisions of paragraph (6) of clause 4 may be of assistance to hon. Members. Under the existing provisions of the Income Tax Ordinance, capital expenditure incurred on the construction of industrial buildings and structures on plantations qualifies for relief as follows - an initial allowance of ten per cent is given together with annual allowances at the rate of two per cent for a maximum period of 45 years. No relief is due for expenditure on clearing new areas or for original planting. The whole cost of replanting, on the other hand, which means the replacement of the crop on any area of land by a similar or by an approved crop on the same area of land, is allowable as a deduction in computing profits as and when incurred. The provisions of paragraph (6) of clause 4 of the Bill do not interfere with the existing treatment of replanting expenditure. The provisions do, however, enable expenditure on clearing new areas and on original planting to qualify for relief over a ten-year period; furthermore, the provisions are more generous in the case of industrial buildings and structures in that relief may now be claimed over a maximum period of ten years instead of over the existing maximum of 45 years.

The third aim is carried out in clauses 5 and 6 of the Bill. Clause 5 is designed to remove the complicated provisions applicable where shareholdings giving rise to dividends are acquired or are sold by making all income from dividends assessable on the basis of the amount received in the preceding year. At present, when a holding of shares is acquired, dividends received during the first or second year of assessment may be assessed to tax more than once, and the tax deducted from such dividends by the paying company may require to be set off for the purposes of collection or repaid to the taxpayer more than once. On the other hand, when a holding of shares is sold, the provisions of subsection (7) of Section 31 of the Income Tax Ordinance have the effect that the dividends received in the second last, or the third last, year of assessment are not assessed to tax at all. Over the period during which shares are held, the taxpayer may be assessed in a greater amount than the aggregate dividends he has received. The provisions of clause 5 will ensure that over the period during which shares are held the taxpayer is assessed only on the exact amount of dividends received.

Clause 6 is intended to meet the request of several members of the accountancy profession for a more simple procedure in the deduction of tax from dividends paid to shareholders. The practical difficulties encountered in the operation of the existing provisions of Section 40 are referred to in the Objects and Reasons attached to the Bill. The broad principle underlying the new clause is that every company resident in the Colony is entitled to deduct tax from dividends paid to shareholders, regardless of whether or not the company itself has chargeable income for the year of assessment in which any dividend is paid, provided that the tax so deducted from the dividends reaches the Revenue. For this purpose, the excess of any tax paid on previous profits over the tax deducted from previous dividends is available, along with the tax payable for the year of assessment in which the dividend is paid, to frank the tax deducted from the current dividend; but where there is no such excess, the deficiency must be made good by a direct payment to the Comptroller of Income Tax. In effect, two running totals will be kept for each company. One will be the total of tax paid each year on the company's income for all years of assessment from the date of the introduction of income tax in 1948. The other will be the total of tax deducted from dividends in the same period. Provided that the total of tax paid exceeds the total of tax deducted, the company will be in perfect safety in deducting tax from its dividends, and only where the tax deducted exceeds the tax paid will the company be required to make up the difference by a direct payment. This procedure is perfectly reasonable when one bears in mind that the tax deducted from a dividend is available for set-off or for repayment when the relevant dividend is assessed on the shareholder. Furthermore, it is thought that the procedure will prove to be of assistance to directors and to company secretaries, since they will no longer be uncertain whether they are entitled to deduct tax on paying a dividend.

The opportunity has been taken to remove from Section 40 the restriction whereby the rate of tax at which a company is entitled to deduct tax from dividends is reduced by any Double or Empire Tax Relief received by the company. The amount of Double or Empire Tax received by any single company is comparatively small, and the effect of reducing the rate at which companies may deduct tax - at present 30 per cent - to take account of such relief, is to bring into existence percentages, for example, 29.18%, 28.97%, which are troublesome to compute and difficult to explain to shareholders. The removal of the restriction will result in the total of tax paid by any company receiving Double or Empire Tax Relief being correspondingly reduced for the purposes of comparison with the total of tax deducted from the dividends paid.

The four amendments which I have mentioned have been considered by the Malayan Board of Income Tax who have advised that they should be introduced with effect from the first of January, 1956. The Federation Government has also accepted this advice and proposes to include the same amendments in the Income Tax Bill which is to be introduced into the Federal Legislative Council this month.

Hon. Members will no doubt be aware that one or two points have been raised during the past few days by the accountancy profession in regard to the operation of sub-clause (6) of clause 6 of the Bill to which I have just referred. These objections were concerned with certain results which, it was felt, might flow where a company had a surplus of tax paid as at 31st December, 1955. It was thought that, where dividends had been paid partly out of profits which had not suffered Singapore tax, or where a dividend had been paid during the period when the rate deductible was 20 per cent only, the provision for grossing up at 30 per cent would have the effect of reducing arbitrarily the credit balance of tax in hand. These points have since been discussed with representatives of the accountancy profession, and it is proposed to amend the sub-clause in Committee in such a way as to remove any possibility of these difficulties arising.

The question of what should be done about companies which, in the past, had deducted tax from dividends in excess of the tax paid on their profits was also raised, and I am able to reinforce the assurance which has been given to the accountancy representatives that no action be taken in such cases. In other words, such companies will start afresh as from the year of assessment 1956. The assurance which I have just given was recommended by and agreed to at the meeting of the Malayan Board of Income Tax at which the amendments embodied in this Bill were discussed.

Clause 7 seeks to introduce a new section - Section 6lA - into the Income Tax Ordinance. In the course of the debate on the Income Tax (Amendment) Bill, 1953, a Select Committee was appointed in 1953 to examine and report to the Legislative Council on that Bill. The Select Committee recommended - their Report is in Council Paper No. 73 of 1953 - that all the clauses of the Bill should be accepted with the exception of clause 8 which sought to introduce two new sections into the Ordinance, namely, Sections 61A and 61B. Clause 8 of the 1953 Bill containing these sections was accordingly deleted from the Bill as enacted. It is not intended to reintroduce the provisions of Section 61B. Government is of the opinion, however, that the proposed new Section 61A, which is contained in clause 7 of the Bill, is essential if the attack on evasion is to be seriously pressed. The clause gives the Comptroller statutory authority to require from any taxpayer a statement containing particulars of all bank accounts, assets and any other facts bearing upon his income tax liability. The statement is intended to enable the Comptroller to compare the growth of the tax-payer's wealth over a period with his declared income in the same period. I would assure hon. Members that the section will be used only by the Comptroller or by senior officers of the Investigation Unit in cases where fraud is suspected. The section will not be used to require statements of wealth from all and sundry, and the honest tax-payer need have no fear that the new powers will be used indiscriminately to compel him to supply information about his private affairs.

The fact that the provisions of clause 7 in the present Bill were enacted in the Federation Income Tax (Amendment) Ordinance, 1953, and are in the meantime omitted from the Singapore Income Tax Ordinance has proved a source of embarrassment to the officers working in the Investigation Unit in Singapore. This Unit has recently been strengthened by the addition of three officers from the Board of Inland Revenue in the United Kingdom, and I feel sure hon. Members will agree that Government is right in seeking to give the Comptroller and to these officers the weapon of the additional powers contained in clause 7 to ensure that the battle against tax evaders is effectively waged. As I have already said, the honest citizen need have no fear of the additional powers: only the evader need have cause for alarm, and he is undeserving of the sympathy of Members of this House.

In this connection, with this new clause 61A, it may possibly be argued that since clause 69 (1) of the main Ordinance limits the Comptroller's power to raise additional assessment to a period of six years from the year of assessment in respect of which tax is due, logically clause 61A should limit the Comptroller s power to call for a statement of banking accounts, etc. to the same period. This argument appears to overlook the fact that clause 69 (1) refers, in the main, to straightforward additional assessments whereas clause 61A is aimed at evaders of tax. It also overlooks the fact that the proviso to clause 69 (1) already recognises the fact that the Comptroller should have the power to pursue an evader of tax to the limits of the Income Tax Ordinance, that is, to the first year of assessment under the Ordinance. In these circumstances, no justification can be seen for attempting to limit the exercise of the Comptroller's powers under clause 61A to a period of six years preceding the year in which evasion is first suspected. It must not be forgotten that this clause refers to evaders of tax and not to honest citizens who have nothing to fear from this clause. I should also point out that a clause similar to the new clause 61A has been in operation in the Federation since 1953, and no need has been felt there to alter the date from 1st January, 1947.

Again, it may be argued that since taxpayers had the right, under Section 31(1), to choose 1948 as the basis year for the year of assessment 1948, it should be made clear in clause 6lA that, for taxpayers who so opted, the critical date for purposes of clause 61A should be 1st January, 1948, and not 1st January, 1947. Here again, I must say that the Comptroller must have power to pursue evaders throughout the whole period of the Income Tax Ordinance, and I should be unwilling to agree that any amendment should be made in this respect. As I have repeated before, the honest taxpayer has nothing to fear from this clause.

Lastly, Sir, clause 8 provides for certain consequential amendments to the main Ordinance and these are described in detail in the Schedule. Sir, I beg to move.

Question proposed.

Mr R. Jumabhoy: Mr Speaker, Sir, I would like the Hon. the Financial Secretary to let us know whether this section exists in the United Kingdom Income Tax Ordinance.

Mr Hart: I assume my hon. Friend means Section 61A?

Mr R. Jumabhoy indicated assent.

Mr Hart: My information, Sir, is that such a clause does not exist in the Income Tax law in the United Kingdom, but I would say that in this particular respect I see no reason why we should be guided by the practice in the United Kingdom. After all, Sir, the object of this legislation here is to meet the needs of Singapore and to prevent the evasion of tax in Singapore.

Mr Lim Koon Teck (Paya Lebar): Mr Speaker, Sir, I wish to make it clear that we are not against this Bill in principle. Indeed we welcome any step which would encourage people to invest in industry. The main object of this Bill is to make our fiscal laws more in line with those of the Federation, and one can hardly object to that.

The only doubt that I have in my mind is the proposed amendment to Section 61A which the Hon. the Financial Secretary has just mentioned. No one objects to more powers being given to the officers of the Income Tax Department in order to prevent people from evading payment of their just taxes and making a full disclosure of all their properties. We welcome and warmly support it. But the point goes beyond that. Under this proposed amendment, the power is now sought for Income Tax officers to demand bank accounts and a statement of assets up to the 1st of January, 1947, which means, Sir, that as the years pass by - 10 or 20 years - the unfortunate small trader or anyone may be suddenly called upon to disclose his full assets. This means, in effect, that it will not be safe for anyone to destroy the records of his transactions as from 1947. This, I submit is a tremendous burden put on the innocent man. You are penalising him as well as the man whom you are chasing for not having paid his taxes. In the normal course of events, I think people have relied on Section 69 whereby the Income Tax officer is allowed to ask for six years assessment, but in this case there is no limit. You have the period of time increasing, and because we are giving extraordinary powers to the officers of the Income Tax Department which are not included in the Income Tax laws of England, where they have more experience of such matters, then, I submit, Members of this Assembly must examine these powers very carefully.

The Income Tax officer has, at the present moment, the right to call for accounts, and non-fulfilment of this request or refusal to comply with this request is not an offence under the Income Tax laws. With this proposed amendment, it becomes an offence not to submit one's statement of account. The Income Tax officer can, under the present law, make a heavy assessment on the taxpayer who will then have to justify his claim that his income is not as high as has been assessed, and to be able to justify that, he will have to produce his books.

Following the tax laws of the United Kingdom and the United States of America, the period for the Comptroller to assess and demand payment of tax is limited to six years by Section 69, which reads:

"Where it appears to the Comptroller that any person liable to tax has not been assessed or has been assessed at a less amount than that which ought to have been charged, the Comptroller may, within the year of assessment or within six years after the expiration thereof, assess such person at such amount or additional amount as according to his judg- ment ought to have been charged, and the provisions of this Ordinance as to notice of assessment, appeal and other proceedings... shall apply to such assessment...".

Now, in all wisdom, the practice of allowing the Income Tax officer a free hand during this period has been going on for hundreds of years in England, and where we are imposing a special law, I submit that we should be guided by this section. The period should be fixed - six years or ten years if you like, I do not mind - but I do not feel that a man should be held to ransom in that at any time during the period of his business life he might be called upon to disclose his accounts which he has probably destroyed. It is intolerable to make a man keep his account books for the next 10 or 20 years. It may be physically impossible - he has not got the space in his shop - and it may not be possible for him to prevent the decaying influence of time and white ants.

Again, the proposed amendment in asking for power to extend to the first of January, 1947, does not make provision for those who have elected 1948 as the first year of assessment instead of 1947, which they are allowed under Section 31 of the Ordinance. If he has elected to be taxed on his 1948 account, I fail to see how he can be called for his statement for 1947. Also it does not mean that, by limiting the Income Tax officer to a period of six or ten years, that officer is debarred absolutely from further action. He still has his right to pursue the taxpayer under the law, as pointed out by the Hon. the Financial Secretary. During those six years, surely if his work has been done efficiently or his office has been run efficiently, there should be some knowledge of wilful non-return of a declaration of assets, and steps should have been taken to call on the man to make a full statement of his account and criminal proceedings instituted against him. If you institute criminal proceedings and there is no time bar to that course being taken, then the Income Tax officer can apply to the Court for an order for the books to be examined or for copies of bank statements to be produced by the bank. I therefore, Sir, give notice that I shall move the requisite amendment in the Committee stage.

Mr William Tan (Tiong Bahru): Mr Speaker, Sir, the Hon. the Financial Secretary has said that Section 61A, quoted in clause 7 of the Bill, does not exist in the United Kingdom and yet Section 61A is being introduced in this Bill. Sir, I am strongly against the adoption of this section for Singapore. The Comptroller should not be allowed to exercise his power under this section until he can establish prima facie evidence to prove that the person concerned is evading taxation. We feel that, in line with our concept of personal freedom in a democratic country, any law that attempts to limit personal freedom should not be enacted except under very special circumstances.

The Chief Minister: Sir, I think it is generally recognised that the country is not getting even 50 per cent of the income tax to which it is entitled. In the normal course, Sir, the citizen has every sympathy with those who succeed in avoiding payment of income tax; but I say that in this country, where income tax is so absurdly low, that it is not merely a criminal offence but it is a moral crime to cheat the Government. The Government of this country, Sir, has been cheated every year since 1947, and the bulk of its loss is not on the part of the small traders for whom the Member for Paya Lebar (Mr Lim Koon Teck) has shown such concern. The bulk of the loss comes from the people whom we are now seeking to pin down, and they are the very wealthy concerns.

Sir, we have added to our staff three experts from the British Board of Inland Revenue in the detection of evaders. They are there now and they are set for this campaign to get back some of the dreadful loss which we have suffered, and also in order to see that in the future that loss is considerably limited.

I am in full sympathy with the principles of both the objections raised - on the one hand, Sir, the inconvenience of maintaining records over an indefinite period; on the other hand, the question of the violation of individual liberty without prima facie evidence. But we have before us, Sir, special circumstances - circumstances which are freely acknowledged - and the blame for these circumstances has been primarily laid at the doors of our own Income Tax Department. I say that Government has done its share in strengthening that Department, and we ask the assistance of this House in giving us the powers to see that these large fish no longer escape their very moderate contribution to the expenses of working the administration of this Colony.

Mr Lee Kuan Yew: Mr Speaker, Sir, we had all hoped that everybody had become comrades in this House when our friends to the right on this side of the House decided to call themselves Liberal-Socialists, and we were told that henceforth they were going to represent the workers, the people, the masses. Today, on this small issue of the proposed Section 61A, under clause 7 of the Bill, we have clear evidence - if evidence is needed - more than just prima facie evidence what particular interests the Liberal Socialists represent. I am certain that it is not just mere coincidence that our friend the Member for Telok Ayer (Mr R. Jumabhoy) should find himself so close to the Members for Paya Lebar and for Tiong Bahru.

The plain fact is this. Everybody says tax evasion is bad for the Government. Every accountant has, and I should imagine the Hon. the Minister for Education himself has, personal knowledge of the great joy with which this sport of evading, lawfully and legitimately, the income tax laws is indulged in. But what we object to is not the sport of dodging the income tax man within his rules and regulations but of having more than one set of accounts. It is also common knowledge that many business enterprises in Singapore keep three sets of accounts. I thought there were two. As a matter of fact, I suggested to the proprietor of a particularly large concern that perhaps what he was offering to the union might not be the accounts which he offered to show his wife, for instance, or his brother! Then, with great indignation, he said that that was the set of accounts with which he had satisfied the Income Tax Department! On leaving the premises of the employer, my union friend turned round to me and said, "Of course, you know he actually has another set of accounts, and this one he only shows to himself! The one that you were referring to he shows to his partners! The one that he was referring to he shows to the Income Tax Department!"

Mr Speaker, Sir, we are glad that the Member for Paya Lebar has raised his objection purely on the ground that it might be impracticable for the small business man to have large storage space for three sets of accounts since 1947. But we are somewhat taken aback when the Member for Tiong Bahru (Mr William Tan), speaking for the same Party now, says that he objects to the whole principle of it. "Prove me a crook first! Give me some prima facie evidence that I am a crook, and then you can call for these accounts!" Sir, I thought the whole purpose of this operation is to get prima facie evidence that he is a crook, or that someone is a crook! The People's Action Party says, "Let the Government have all the powers to prove as many crooks guilty as they can get their hands on!"

Mr Lim Choon Mong (Serangoon): Mr Speaker, Sir, I had not intended to speak on this issue since my colleagues have already spoken, but my Party having been referred to by the P.A.P., I think I should take the Floor to make our stand clear. We do not just represent the big business people. We represent the small business people. But we also represent the working people.

Mr Lee Kuan Yew: Everybody!

Mr Lim Choon Mong: Yes, indeed, we represent everybody! In this country, if you represent one class and instigate that class against another, then you are doing Singapore no good. If you represent one race and you instigate that race against another, then you will also be doing Singapore a bad turn. We stand for racial harmony and we stand for inter-class co-operation.

Mr Lee Kuan Yew: That is right!

Mr Lim Choon Mong: Now, I am also wondering why an hon. Member in this Assembly, protected by all the privileges, should cast aspersions and say that certain members of the public are cheating the Government. I feel that that is not the right way to tackle things. If we have a case against a tax evader, if we know that such conditions exist, it is our duty, especially so as a Member of this Assembly, to bring the facts to the Income Tax Department and have him hauled up. We want more money, legitimate money, from tax - [Interruption.]

Mr Speaker: Continue, Mr Lim Choon Mong.

Mr Lim Choon Mong: What I think, Sir, and what I would like to speak now is this. We have a law that is meant for everybody. We in this House say that we are going to enact this law to catch the big fish.

Mr Lee Kuan Yew: It does not say so.

Mr Speaker: Order.

Mr Lim Choon Mong: It has been referred to by the Hon. the Financial Secretary and the Chief Minister. I agree with that stand. We must catch the big people who try to evade tax, but once this provision becomes law, I am afraid that not only will the real evaders get it - probably they may not get it - but the small man might get it.

Mr Lee Kuan Yew: Evasion means cheating, and he deserves it!

Mr William Tan: Shut up!

Mr Lim Choon Mong: Obviously so! [Interruption] I have mixed with a large number of small shopkeepers - shopkeepers with probably a capital of $2,000 to $5,000, doing their business as a family affair. I have known that tax forms have been sent to them, and in many cases many of these people have been hauled up to show cause why they should not be assessed at a big sum, and later on again to say why they should not show their accounts further back. Sir, if you compare the number of cases where the big people and the small people have been hauled up by the Income Tax Department, I think you will find that it is the small people that have been hauled up very much more often. Again I would put this to you, Sir. In quite a number of cases, a small shopkeeper has been hauled up and after his income has been examined, it is found that he is not taxable. Now such cases waste the time and, money of the Government, and such cases, too, give opportunities to quite a number of people in Singapore to get some money out of them by way of what we call "rendering a service". I feel that when we think about a provision of this nature, which we hope will affect only the big fish, we must also make sure that the very small shopkeepers are not going to be inconvenienced unnecessarily.

Mr Hart rose -

Mr Speaker: Mr Hart, in reply?

Mr Hart: Mention has been made, Sir, of the fact that a provision of this nature does not appear in the United Kingdom law, and I did say in reply that we were more interested in what was required in Singapore than in what was done in the United Kingdom. I should, perhaps, amplify my remarks. In 1952 we managed to secure the services of a very senior member of the Board of Inland Revenue to study and report on the question of evasion. He had served upwards of 35 years on the Board of Inland Revenue. One of his main recommendations was that this particular section should be written into the law of the two territories. There was man of great experience of income tax law and procedure in the United Kingdom recommending that this provision is required and is necessary in Singapore.

Now, points have been made about the trouble which will be entailed in keeping accounts back to 1947. I myself do not see how the anxieties of which hon. Members have spoken in the debate can arise. Any honest citizen who keeps his books in the normal way and pays his tax when it is due, need do no more than conduct his business operations in the way he has always done, destroying the books as and when he thinks fit, because he will be certain in his own mind that the Income Tax Department will never, in any circumstances, have reason to call for his accounts. The only people who will be placed in some doubt as to what they should do with their accounts are those people who either have evaded tax or who have been on the borders of evasion and they certainly should keep their accounts right back to 1947. But as regards the large body of honest citizens, this provision, as far as the keeping of accounts is concerned, will cause no trouble whatsoever. They will merely continue to organise and conduct their business, and keep and destroy their accounts in the way they have always done.

Then, the question has been raised - as I suggested in my speech that it might be raised - that, because the powers of the Comptroller under Section 69 (1) are limited to a period of six years, logically the powers of the Comptroller under this new Section 61A should be limited to a similar period. The argument, in my opinion, is fallacious, Sir, because there is no connection between the two functions - the functions of the Comptroller under Section 69 (1) and the functions of the Comptroller under this new Section 61A. Under Section 69 (1), the Comptroller merely raises additional assessments in a plain straightforward manner in plain straight forward cases. But you will note, Sir, that under Section 69 (1) there is a proviso which says that where there has been fraud or wilful default, the Comptroller may pursue his enquiries right back to the beginning of the Income Tax Ordinance. In other words, the Legislature has in the past admitted the right, in the case of evasion or fraud, of the Comptroller to pursue his enquiries as far back as he may go. Correspondingly, when we suggest in Section 61A that he may pursue his enquiries back to the first of January, 1947, we are doing no more than stating once more the power which he has already been given under this particular section.

Lastly, there is the question - as I again suspected might be raised - that if under Section 31 a taxpayer has opted that 1948 should be regarded as the basis year of assessment, the Comptroller should be precluded from investigating back to the first of January, 1947. The answer to that argument, Sir, is that if there is evasion, it should be tracked down to the limits of the Comptroller's power. That is the crux of the matter, Sir - the prevention and detection of evasion - and in so far as we here represent honest citizens and not evaders or wrongdoers, this section of the Ordinance should receive the full support of the Members of this House. Sir, I beg to move the Second Reading.

Question put, and agreed to.

Bill accordingly read a Second time.