RESIDENT INCOME TAX (Collection)

Mr D. S. Marshall asked the Financial Secretary whether he will take measures analogous to those prevailing in almost all other territories to prevent the departure of residents until their Income Tax has been paid or a sufficient guarantee obtained for payment thereof.

Mr T. M. Hart: It is not clear, Sir, what measures the hon. Member has in mind. In Australia and New Zealand, where geographical position confers a distinct advantage, there is a system of tax clearances whereby shipping and aircraft operators are prohibited from issuing passenger tickets without the production of a certificate that outstanding income tax has been paid. Limited forms of this system exist in India, Pakistan and the United States, but Ceylon relies on the same powers as exist in the Malayan Income Tax Ordinance. The possibility of introducing a system similar to that existing in Australia and New Zealand has been considered on a number of occasions. On each occasion, however, it has been decided not to proceed with the proposal for the following reasons:

(a) the ease with which a really determined tax evader can leave the territory without purchasing a passenger ticket;

(b) the large number of transit passengers visiting Singapore for varying periods and the very large number of residents who leave Singapore for varying periods;

(c) the difficulty of providing the comparatively large staff which would be required to enforce such a system at a time when the Department is still having the greatest difficulty in obtaining staff for the assessment and collection of tax from resident individuals and companies;

(d) the cost of enforcing the system in terms of cash and diverted effort which would be disproportionate to the amount of tax recovered;

(e) the great inconvenience which would be caused to a great number of law-abiding citizens of Singapore who have to leave the territory on business from time to time.

Mr Marshall: If it please you, Sir, I would ask whether the Financial Secretary would consider, in view of the grave position disclosed by the figures, the immediate introduction of provisions which prevent a person, who has been in Singapore for more than three months, leaving Malaya - this must be a pan-Malayan measure - without a clearance from the Malayan income tax authorities.

Mr Hart: First of all, Sir, the position is not grave. The figures which I quoted in answer to the first question indicate quite clearly that the Income Tax Department is very rapidly getting on top of this particular problem. We are at the present moment considering amending the Income Tax Ordinance to give power to the Comptroller to call upon employers to make returns of employees joining their organisations and employees leaving their organisations and to give warning of the impending departure of employees. Any system whereby shipping and aircraft operators who are required to have income tax clearance certificates before they issue passenger tickets would require joint action on the part of the Federation. Whether the Federation would be prepared to join hands with us in this matter, I cannot say.

Mr Marshall: Sir, would the Financial Secretary seek an agreement with the Federation on this matter? Leaving it as it is is a direct incentive and encouragement to the non-domiciled residents to cheat income tax.

Mr Hart: I will certainly discuss with the Federation the possibility of introducing such a system as the hon. Member wishes.

Mr Marshall: Thank you.