Hansard, 1956-11-20

asked the Financial Secretary to give figures of the number of persons who have left the Colony without paying their Income Tax, and the total amount of Income Tax due by them, giving the breakdown for each year since the coming into force of the Income Tax Ordinance.

Sir, since the Income Tax Ordinance came into force, 1,827 persons have left Singapore without paying their income tax. The total amounts due from these persons are as follows: Year of Tax unpaid Assessment $ 1948 130,446 1949 262,433 1950 133,286 1951 157,434 1952 121,854 1953 123,419 1954 124,892 1955 44,696 1956 to date 13,547 --------- 1,102,007 --------- I should also say, Sir, that since the introduction of income tax in the colony, tax amounting to $129 million has been collected from resident individuals.

asked the Financial Secretary whether he has taken any action against these defaulters; in how many cases has action been taken; and for what amount.

Sir, in every case all possible action is taken to recover the tax due. Efforts are made to establish contact with the taxpayer and to persuade him to pay what is due. Legal action is not practicable as the taxpayer passes out of the jurisdiction of the colony courts as soon as he leaves the colony. It is regretted that information as to the number of cases in which action has been taken and the amounts recovered is not available and can only be obtained with great difficulty.

If it please you, Sir, surely the Financial Secretary is conscious of the fact that there is a reciprocity of judgments agreement between us and the United Kingdom, and most of these defaulters return to the United Kingdom. Why -

Order. I take it that the hon. Member is coming to a supplementary question?

If it please you, Sir, I would ask whether he would consider taking action in the courts of England against these defaulters.

I am sure the hon. Member has been aware, Sir, although he has perhaps forgotten, that there is a well established convention of private international law that, as a matter of public policy, the courts of one State will not enforce the judgments of a revenue nature of another State. For that reason, it has not been possible to take legal action in the courts of the United Kingom.

Mr Speaker, Sir, in other countries a person has to show an income tax clearance before -

Order.

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.

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.

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.

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.

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.

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

Thank you.

"to amend the Criminal Procedure Code (Chapter 132 of the Revised Edition)", presented by the Chief Secretary (Mr W. A. C. Goode); read the First time, to be read a Second time on Wednesday, 5th December, 1956, and to be printed.

"to amend the Prisons Ordinance (Chapter 99 of the Revised Edition)", presented by the Chief Secretary; read the First time, to be read a Second time on Wednesday, 5th December, 1956, and to be printed.

"to amend the Children and Young Persons Ordinance (Chapter 128 of the Revised Edition)". presented by the Chief Secretary; read the First time, to be read a Second time on Wednesday, 5th December, 1956, and to be printed.

Order for Second Reading read.

Sir, I beg to move that this Order be discharged and that the Income Tax (Amendment No. 2) Bill be withdrawn. As hon. Members are aware, Sir, the Government does not now wish to proceed with the suggestion that the personal allowances should be reduced.

I second it.

Question, "That the Order for Second Reading of this Bill be discharged and the Bill withdrawn." put, and agreed to. Resolved, That the Order for Second Reading of this Bill be discharged and the Bill withdrawn.

Order for second reading read. 10.13 a.m.

Sir, I have His Excellency the Governor's authority to move, "That the Bill be now read a Second time." This, Sir, is a complicated Bill. As hon. Members will see from the Comparative Table which appears on page 25, the Law Officers, in drafting, have referred extensively to United Kingdom Finance Acts, thus taking advantage of the long experience of the United Kingdom in the matter of luxury and purchase taxes. The explanatory note at page 23 of the Bill serves as a useful guide to these provisions. Perhaps I may be allowed to outline some of them, Sir. Part I contains definitions which require careful study. Part II calls for no comment. Part III is most important. It deals with the nature and scope and method of imposition of a luxury tax. Clause 8 (1) prescribes that the tax should be charged on the wholesale value of all chargeable goods bought under chargeable purchases. The Governor in Council is vested with the power of deciding what goods shall be subject to tax and at what rates. Any order in this connection, however, must be ratified by the Assembly within seven days. Clause 8 (4) defines a chargeable purchase as "any purchase made from a wholesale merchant or manufacturer selling by wholesale". Purchases made by a registered wholesale merchant or a registered manufacturer of goods as stock for business or as materials are exempt from tax. Clause 8 (5) specifies that the tax will become due on delivery of the goods under the purchase and the seller shall be accountable for tax. Clause 8 (6) states that tax will be charged on the wholesale value of all chargeable goods imported into the colony except goods imported by registered wholesale merchants or manufacturers. Clause 8 (7) states the circumstances and conditions under which goods may be imported tax free by registered wholesale merchants and manufacturers. Clause 8 (9) exempts from tax goods imported for re-export or transhipment under certain conditions. Clause 9 defines "wholesale value" as the price which, in the opinion of the Comptroller, the goods would fetch on a sale by wholesale in the open market in the Colony to a retail trader carrying on business in the Colony and if it were made in the circumstances specified in the First Schedule to the Bill. Clause 10 deals with the registration of wholesale merchants and manufacturers whose business includes the selling of any chargeable goods. Clause 10 (2) provides that a manufacturer who is not required to be registered under the Ordinance shall be so registered if he satisfies the Comptroller that he uses chargeable goods in substantial quantities as materials. Clause 10 (3) provides that persons who should be registered must make application to the Comptroller. Clause 10 (4) provides that any wholesale merchant or manufacturer who finds that the proviso to clause 10 (1) no longer applies to him, shall immediately apply for registration. Clause 10 (6) provides for the issue of a certificate of registration, and the Comptroller may in certain circumstances call for security for the payment of tax. Clause 11 contains provisions whereby the Comptroller shall exempt a person from registration when the tax on his purchases shall be not less than the tax on his sales; in other words, where the tax payable on his purchases and importations in respect of stock or materials would be more than the tax he would be accountable for on his sales. Clause 12 prescribes when a purchase shall be deemed a purchase by a registered wholesale merchant as stock or by a registered manufacturer as materials, and therefore exempt from tax. Clause 13 provides for relief against a double charge of tax. Clause 14 states that, where a registered wholesale merchant or manufacturer appropriates or applies any chargeable goods in his ownership to the purposes of any business carried on by him of selling chargeable goods by retail or of letting out chargeable goods on hire or to any other purpose not being a sale of the goods, the appropriation or application shall be treated as if it were a chargeable purchase. Clause 15 (1) prescribes that, when any person required to be registered applies a chargeable process, tax shall be chargeable on the wholesale value of the resulting goods and shall become due on the completion of the process. The person who applies the process shall be accountable for the tax. Clause 15 (2) exempts persons who apply a chargeable process from accountability for tax when the goods are his property at the time of the completion of the process, subject, of course, to the provisions of clause 14. Clause 16 provides that any person who carries out a chargeable process shall be treated as a manufacturer whose business includes the selling of chargeable goods. Clause 17 states that any retail trader purchasing on a wholesale scale shall be treated as a wholesale merchant. Clause 18 states that the seller of chargeable goods under a chargeable purchase shall add the amount due in tax to any invoice issued by him. Clause 19 provides relief for exported goods. Under subclause (1) the Comptroller may exempt from tax goods which would otherwise be chargeable if they were exported from the colony. Under subclause (2) the Financial Secretary may give directions for the payment of an allowance for tax paid or payable in respect of goods exported when the Comptroller is satisfied that the conditions specified in the subclause exist. It will be seen, Sir, that the Bill gives wide powers to the administration. Any goods can be deemed luxury goods and any rate of tax imposed on them by the Governor in Council, subject, of course, to the approval of the Assembly. Again the Comptroller of Customs, who is responsible for the care and management of the tax, is given wide powers under a number of clauses. The wide discretion given to the Comptroller has apparently been a cause of anxiety to the Bar Council which has addressed the Attorney-General and other Members of the Assembly on the subject. In particular, the Bar Council takes objection to the Comptroller's powers under clauses 9, 17 and 26. Note has been taken of these objections and they will be given careful consideration in due course, and doubtless when this Bill is sent to Select Committee, the Members of the Committee will consider their objections too. Government has also given consideration to the question of local industries and has decided, as a measure of encouragement, to exempt from tax all goods entirely manufactured locally and also goods in respect of which a certain percentage of their wholesale value has been expended locally. The necessary amendments to the text of the Bill will be moved in Committee in due course. Justification for this Bill is that Government will have to tap all sources of revenue in the future, and luxury goods appear to be a justifiable source of revenue. As I said earlier, very considerable sums of money are spent each year on goods which cannot, by any stretch of the imagination, be deemed essential or even desirable. If confirmation of this statement is required, one has only to look about one, in the shop windows, in the homes of people in Singapore and at people proceeding about their lawful occasions. That being so, it is only proper that Government should have some small share of the sums spent on luxury goods. A great majority of countries in the world today impose taxes on goods which are outside the "essential" category. In the great majority of cases, the tax is imposed on the wholesale price. It would not be possible to give any estimate of the possible yield from this tax until it is decided what commodities should be taxed. In selecting goods to be taxed, careful consideration will be given to the nature and needs of the entrepot trade. In so far as it is possible, having regard to the needs of the revenue, goods which enter largely into trade with neighbouring countries will be avoided. Where entrepot trade goods have to be included, efforts will be made to reduce inconvenience to traders to a minimum. It was to be expected that this Bill would be a controversial measure. It is novel and involves a radical departure from previous taxation principles in Singapore. For these reasons, it was decided to allow a period of time to elapse between the First and Second Readings and subsequently to send the Bill to Select Committee. This will allow full ventilation of views and discussion as to the merits and principles underlying the Bill, both in and out of the Assembly. In connection with discussion outside the Assembly, it has been suggested that the Bill means the death of free trade in Singapore, and, that being so, that it would be simpler and more straightforward to impose import duties right away. It certainly would be simpler, but it would be contrary to the intentions of Government. Singapore's prosperity has been built on trade and, no matter what industrial expansion takes place in the future, will continue to depend on trade, on free trade and on freedom to trade. Government is fully aware of the need not only to maintain but also to increase trade. As I have said earlier, all Government's development planning starts from the premise that Singapore must be maintained as a centre of world trade. In the circumstances, it is extremely unlikely that this Government, or indeed any government except one bent on the destruction of Singapore, would introduce any law or make regulations under such a law which would undermine the prosperity of the port. I hope that hon. Members will speak frankly on this measure so that their views can be considered by the Select Committee and by Government in due course. Sir, I beg to move. Question proposed.

Mr Speaker, Sir, we have before us a Bill to tax luxury goods. Whatever its name, it is a fundamental departure from the free trade policy of Singapore which has continued for over a century. Sir, I hope the Government Members will forgive me if I am harsh with them. They have just come into power and that power of minority has been exercised with three ex-officio Members and four nominated Members. The Government has already said that there will be new elections in August. If that is so, is it wise on their part to push through such a Bill which is just like committing a crime on Singapore? It is a departure from principles and that is why I say it is a crime. Sir, I might also say that the present Coalition Government cannot claim that they represent the trading interests.

We do not.

They will say, "Why? We do not care." But I will say this: as Singapore exists on entrepot trade, it is trade that brings in the money, and the workers, the wage-earners and the farmers can only flourish by working together hand in hand. We have no natural resources, none whatsoever. How far and to what extent is the Government going to tax? There is a limit and we have reached this limit - that the Government is forced, by their extravagance, to kill the free trade policy of this country. Sir, what is luxury? The term "luxury goods" has not been defined. If the Government wants to bring in a few items under this category, as it has already done with motor-cars, by all means describe what are luxury goods and place an imposition on them. But to pass this Bill and give such powers to the Government or any future government, there is a danger that it might mishandle the powers and everything might be included under the category of luxury goods, because money is necessary to run the government. It is said that safeguards will be provided which will ensure that the Government will not do this or that in order to preserve our entrepot trade. What is the guarantee that another government will not do this or that since the Ordinance is in force? We on the Opposition Benches are not willing to give such powers to the Government. Sir, to produce money you have to spend first on starting a department. You have to have a vast establishment. You have to have bonded warehouses ultimately if not immediately. This is necessary if money is to come in. We must have inspectors and clerks, etc. for these warehouses. Then, Sir, we have to guard against corruption. Sir, I have been in business here since 1916. I have been President of the Indian Chamber of Commerce for several years. I have been to E.C.A.F.E. conferences and I have heard about the trading conditions of other countries and I have compared ours with theirs. With what little experience that I have, I would urge the Government not to proceed with this Bill. I am glad that the Financial Secretary has said that some time will elapse before this measure will be brought before the Assembly and that a Select Committee will be appointed to consider it. All this is good, but I would ask, "Why is all this necessary?" How much more money is wanted during the next 8 months while this Government remains in power? It can raise the money by income tax or any other tax but not by this Luxury Tax Bill. Sir, who will suffer as a result of the imposition of this luxury tax on goods? The majority of the population on this small island are the workers and wage-earners. Sir, I have never been personal in my remarks, but I would like to quote the remarks of the Minister for Communications and Works which I read yesterday in the Press. I was not present when he was speaking. Sir, I have great respect for the school-master's knowledge in theory -

Whose side?

The Government side. It was very interesting to hear his arguments on socialism and so on, but let me remind him. He said yesterday, subject to correction, that there was no need for gold ornaments or something like that which I read in the Press. The Minister for Communications and Works (Mr Thomas) rose -

Is the hon. Member giving way? Mr R. Jumabhoy resumed his seat.

What I said yesterday was that it was desirable to mobilise all hoardings of unfruitful capital used up in gold ornaments or in dollar notes tucked away in cupboards and not put to productive use.

Thank you; I would say that the Europeans can never understand the Asian way of life.

Exactly!

It is a necessity for a poor man to save some money and because he has insufficient money to open a bank account, he invests his savings in gold ornaments. The Minister also spoke about remittances to India and China, but he forgot to say that billions of dollars have been drained away to the United Kingdom for 135 years. Sir, as I have asked, "What are luxury goods?"

Ask yourself!

Everyone in Singapore uses scent, soaps, cosmetics, radios and refrigerators. They are necessities to the wage-earner, the clerk, the merchant or the rich man. By introducing this Bill, the Labour Front Coalition Government, which claims to be representative of the workers, will be imposing hardship on them. It would be a fine idea if the Government, after bringing in this Bill before the Assembly, were not to proceed with it. Orders must have been placed or goods have been hoarded by profiteers, and if the Bill is not proceeded with, the benefit will go to the public because these profiteers will have to sell their goods at a cheaper price. In any case, during the next eight months while the Government remains in power, it will not do any good and it is not necessary for it to introduce this Bill. But if the necessity arises, then let a fully elected government by the people and for the people take the necessary measures to introduce a similar kind of Bill if it finds it necessary. Sir, in conclusion, I would request the Government not to proceed with this Bill which is not in the interests of the colony or the masses or anyone else. 10.36 a.m.

If it please you, Sir, I support this measure unreservedly. The Member for Telok Ayer says - and he speaks rightly - that there is no person on this side of the House who represents trade. That is true, Sir, but I would also add that though we do not represent trade, we are and have always shown ourselves to be very conscious of the fact that Singapore survives by virtue of the activity of capital through trade and commerce in this territory and that our record does indicate that we have been conscious of this, and we are anxious that no harm shall be done to this aspect of our economic life. I believe, Sir, that the Member for Telok Ayer's fears are grounded on the fact that Government has not shown its hand as to what it believes or it considers to be luxuries; but I would draw his attention to this, Sir: this Bill is in the nature of the overall law which will control the tax on luxuries, but in fact the luxuries will be defined when the tax is applied; and seven days after it is applied, this House will have to confirm the decision. That is necessary, Sir, so that this step should, first of all, be progressive, and, secondly, we cannot now disclose what is in mind before the Bill is passed and thereby gives the importer an opportunity to pile up goods which may or may not be taxed afterwards. I would remind the House that the question of taxation on individual objects, subject to this tax proposed by Government, is still in the hands of the House; and supposing we bring in a tax on radios in two or three months' time, then within seven days this House will have to decide whether or not radios are a luxury, and if they are, whether they are appropriate objects in the existing circumstances for the application of this tax. The House, in giving these overall powers, is in fact not giving power for application of this tax to individual articles. It is retaining that power and can exercise it when the Government comes before the House seeking confirmation of its desire to tax any particular type of object. Sir, I am happy to learn that this Bill will go before a Select Committee. It is a good measure and it should, as soon as possible, be on our statute book. But it is a difficult measure, a measure full of acute technical subtleties, and representations - some of which seem very valid - have been made by the Bar Committee with reference to various aspects. I think that a Select Committee is certainly appropriate to consider each and every individual phrase in the Bill, and I welcome the suggestion made by the Financial Secretary that this Bill will, in fact, if it passes its Second Reading, be submitted to a Select Committee. I have only one other remark to make on this measure, Sir. I welcome the statement of the Financial Secretary that local industry will receive direct encouragement by the exemption, in part, of those taxable luxury goods which are produced locally. I would like to go further. Our industrial-set up is in an extremely poor condition and I would like a large measure of assistance where possible to be given to it, and in this instance it is possible. I would like to see all luxury products, which are subject to this tax, exempted from taxation if produced locally. I also welcome the indication given by the Financial Secretary that products which are even partially produced in this colony, that is, in respect of which part of the cost is incurred in this colony, will be considered for partial exemption. Sir, this is a good measure, a necessary measure, a well-thought out measure, and I say with respect to the Member for Telok Ayer that I really do not see how it can affect our entrepot trade. The basis of our entrepot trade is the produce from the East and the essentials from the West in which we deal. Luxury goods as such form but a very small proportion of our trade and we have been promised special arrangements for the entrepot trade in these luxury goods so that it would not in any way be impeded. 10.42 a.m.

Mr Speaker, Sir, my objections to this Bill are three-fold. Firstly, any tax measure which endangers the free port status and the entrepot trade of Singapore is a bad measure and I am not convinced by the assurances of the hon. Gentlemen opposite that this will not have this effect. Secondly, the tax on certain luxuries, while intending to tax the rich, may, by a chain reaction, result in raising the cost of living for the poor man as well. Thirdly, such a tax reduces the buying and selling of goods and the contraction in trade in an island which lives or dies by trade can be suicidal. I notice that of all the definitions or interpretations which are made under clause 3 of this Bill, there is no definition of the most important term of all, the term "luxury". This makes us extremely suspicious of Government's intentions. Only yesterday I pointed out that small cars in certain circumstances are necessities. As the pressure of population increases, people have to live further from their offices and from schools while the public transport system lags inevitably further and further behind this development. Therefore it is essential that the Financial Secretary should give us a list of the articles which he has in mind to tax and a list beyond which he will in no circumstances go. Who knows otherwise whether textiles and clothing will not be counted as luxuries in time to come? In his speech on the Second Reading of the Appropriation Bill the Financial Secretary stated as follows: "Even if the imposition of luxury taxes were to limit consumption of luxury goods, I should be perfectly happy since it would mean that the population saved more and had more to invest in the Government loans...". This is a dangerously over-simplified argument and I am inclined to think that the savings would go, according to taste, into company shares, gold and jewellery or into lottery tickets. It is as dangerous as the other argument that if you tax luxuries, you are necessarily only taxing the rich, an error into which the Minister for Commerce and Industry fell yesterday. Very often you will find that from such taxation it is the poor man who in the end is to suffer. Let me give an example. The Financial Secretary has given, as I have said, no indication what the Government regards as luxuries, but a little intelligent guessing suggests that refrigerators and air-conditioning sets might be on a short list of possibilities. Now, raising the price on these articles will restrict sales and, as a result of this, the consumption of electricity will drop; and it will drop during the 20 hours outside the peak period from 6 to 10 p.m., or, precisely, during those 20 hours when it is essential to sell as much electricity as possible. Let it not be forgotten that it is the purchasers of refrigerators and air-conditioning sets who spend more on electricity, and are therefore helping to keep down the price per unit of consumption. To make a complete generalisation - abolish all luxury electrical appliances and the price the poor man pays for his electric light will go up. Encourage the sale of these appliances by enabling more people to buy them and to use electricity, and it will be possible to lower the unit rate for lighting and lower the cost of living for the working man. May I quote a sentence from the 1955 Report of the Electricity Department of the City Council: "As usual, emphasis must he placed upon the fact that only by increased revenue from the sale of electrical energy can this Department safely extinguish the various loans to which we have been committed through the necessary construction of Pasir Panjang Power Station." Sir, I give this example as a warning to Government to study very carefully what chain reaction can be set up by an ill-considered tax. It is part and parcel of what I already said yesterday regarding the dangers of the inflationary spiral. The luxury tax, while on the face of it means taxing the rich without affecting the poor, can upset the economy of the country to its foundations. It can raise the cost and lower the standard of living, which would be fatal. Just when the wage-earner has obtained better living conditions to which he is entitled and brings within his reach the extra comforts of life, it appears that the present Government will put a tax on them to take them out of his reach. It reminds me of the story of Sisyphus, the Greek legendary king who was condemned in Hades to roll a stone up to the top of the mountain, and when he laboured to the peak, the stone rolled down again and he had to start all over again. Sir, this Bill seems to me to be the thin end of a wedge. Once it is approved in principle on the basis of certain types of luxury goods, there is no knowing what will come within the definition of "luxuries" in the future. 10.48 a.m.

Mr Speaker, Sir, I am rather surprised that a Party which claims to have the word "Socialist" as part of its name would be opposed to a measure which any socialist-thinking person would welcome, a measure that is intended to extract painlessly - I can say it because it is slow extraction - a little bit of money - not very much because the burden does not fall on one individual - to pay for the social services to be provided for the poor. The main argument, Sir, that has been advocated against this Bill has been one of departure from our free trade policy. Sir, I have emphasised in this House in the past this obsession with the free trade policy of Singapore can be carried too far. Sir, there is no doubt that we survive on trade, and it is the duty of every government that is in power in this country to see that nothing is done that will hamper or discourage our entrepot trade. But, Sir, there is a limit to which this principle should be carried, and I say that with some people this free trade principle has become an obsession. Economic conditions have changed and are changing every day. We are not in the position as we were before. The world has changed. Asia has changed. Economic policies have changed. Politics have come into the picture now. In order to survive, therefore, we must see that we shape our policy in accordance with the times. It is all very well to say that we are killing the free trade principle. We are not doing that. In fact, we want to preserve as much as possible our entrepot trade and to expand it as much as possible; but it is dangerous to generalise on it. We must know in which sphere our entrepot trade lies and what we can do outside this sphere without harming our entrepot trade. We should be free to do this. Sir, the Member for Telok Ayer said that the Government does not claim to represent trading interests. Sir, that is in keeping with the principle of democracy that representation in the House of the people should be on a democratic basis and that there should be no reserved seats for the representatives of any particular interests. In fact, the hon. Member has many times remarked that this Government is not fully elected and that there are four nominated Members in this House and so on and so forth. Therefore, Sir, I do not see how he can be moan the fact that trade is not represented. But I can say this, Sir: that although I have not had the vast amount of experience that the hon. Member has in trading spheres - I am younger and obviously, therefore, I have not had that much experience as he has - I can claim that I do have some experience of trade and entrepot trade and I will not do anything that is going to harm our trade. I think Members on the Opposition side should rest assured on that point. One remark that the Member for Telok Ayer made, I think, calls for some consideration, and that is that a future government might mishandle this power which we are seeking now. That is a possibility which we have to think over very carefully. But I may answer that point by saying that a future government, even though it has not got this particular power, can always ask for and get this power in a future House of the people. So there is nothing to prevent any government bringing in any measure which it likes provided it has a majority, and therefore whether or not we give this power to posterity is immaterial. The Member for Tanglin raised the point of what are luxury goods and why we have not defined "luxury goods". Sir, it is a matter of opinion as to what are luxury goods. It is a matter of the standard of living of the people. It is a matter of the environment and the upbringing and the residence of the people. To us, what appears to be a luxury may be a necessity to people who have a better standard of living, for instance, to people in the United States. Yet to us what appears to be a necessity may be a luxury to people living in Africa who probably may not have seen it at all. Sir, the Member for Tanglin has also stated that there may be a chain reaction which may affect electrical consumption if a luxury tax is imposed on certain electrical appliances. That is a far-fetched argument. There is always a chain reaction ending up somewhere or other if you do anything in this world. Something is going to be affected by it. So I am sure that whether this or any future Socialist government brings in a measure for raising income tax on the higher limits of income, say, from 40 per cent to 50 per cent or even 60 per cent, that particular hon. Member is going to say that the result of the chain reaction will be to kill incentive, and therefore the activity of capital will be dampened, and the man with money will sit tight and not invest his money, and therefore the labourer will not be able to get a job and so on and so forth. That argument can be carried to any limit. Then, Sir, the Member for Tanglin said that electrical consumption may be reduced as a result of this luxury tax. And yet what do we hear today? We hear that the City Council is going to spend another $65 million on extensions or on the building of a new power-station. Sir, I think the crux of the matter is: what items are going to be included in the Luxury Tax Bill. That is where hon. Members can debate bitterly if they feel that any item which the Government puts in the Schedule to this Bill later on is not appropriate to be included there. But to denounce the general principle of this measure because they do not know what item is going to be included at this stage is wrong. I commend this Bill, Sir, to hon. Members on both sides of the House. 10.55 a.m.

Mr Speaker, Sir, in spite of the assurances by the Financial Secretary, the Member for Cairnhill and the Minister for Commerce and Industry, I am not convinced that this Bill will not affect the status of Singapore as a free port. We all agree that we live by trade, and now that our entrepot trade is diminishing in volume due to the producing countries exporting direct to Europe and America, and the Minister for Commerce and Industry has spoken about his fears for the expansion of our industry in Singapore, we must think twice before we do anything that may hurt our trade. The Minister for Commerce and Industry seems to get hot and bothered and has turned this debate into a political issue, but we on our side want to put before the House the views of the traders, particularly the small traders who do most of the entrepot trade. This Bill has left the items intended to be taxed. If it is confined to goods which are real luxuries such as refrigerators and air-conditioning sets, the tax it will bring in will not be worth the expense of setting up a department to collect it and the expense and trouble it will cost the wholesaler. If it is intended to apply to many more items, then it cannot be a luxury tax and the fears of the public that the list of taxable goods will be the same as that of the Federation will be justified, and the poor man will suffer as much as those who can best bear the burden and upon whom it is intended that this tax should fall. This tax will hit the small traders most. Their business lies in sending out various kinds of goods to the small islands around us in exchange for produce. They cannot afford a large staff to keep the records and fill the forms required by this Bill. It is a most complicated piece of machinery and even the Financial Secretary has admitted it, and members of the Bar are greatly concerned about some of the anomalies already noticed. We are very glad indeed, therefore, that this Bill will be sent to Select Committee. Even many large firms have expressed their opinion to me that the working out of this tax will impose almost impossible conditions on them. If this luxury tax is to be imposed at all, it should be at the retail level and not at the wholesale level, which is the medium of our entrepot trade. A measure like this, imperilling Singapore as a free port, can only be justified in extremis, that is, if there is no other way in which finance can be found by the Government for the running of Singapore, and I am not at all satisfied that we are in that position yet, unless we choose to kill the goose that lays the eggs. I have advisedly left out the word "golden". Apart from the criticisms already expressed in this House yesterday, and I do not wish to repeat them, we have many items of expenditure which can be pruned and I shall attack these items in the Committee stage; but I do solemnly repeat that this Bill, if passed, will do more harm than good to Singapore. 11 a.m.

Mr Speaker, Sir, the speech on the Luxury Tax Bill delivered by the Hon. the Financial Secretary gave us a curious feeling in the pit of our stomach! He was at great pains to emphasise that the people have the money to spend on things other than the bare necessities of life and they undoubtedly had, so he claimed it was therefore, only right that the Government should have a fair share of it. This argument is not only unconvincing but dangerous. In simple Queen's English, it means that "what is your's is mine". The citizens of Singapore fully appreciate the fact that Government needs all the revenue it could get, but they do feel that the intricate matter of luxury tax must be debated, talked about and challenged lest they would suffer the consequences of the Hon. the Financial Secretary's indiscretion. In the words of the Hon. the Financial Secretary, the Luxury tax demanded and expected is to be partly determined by a mere look at the shop windows rather than by a careful study of the "earning and paying abilities of the people". The income of the majority of the people of Singapore ranges between $2,500 and $4,000 per annum, and I would draw the urgent attention of Government that these wage-earners are at all times so poor that they cannot afford to spend money on one thing without depriving themselves of something else. It is not hard for Government to understand also that the purchase of even a tiny gold locket does add zest to a wage-earner's life and that the possession of a wrist watch constitutes a social distinction, being the first step upward in the economic progress of the country. Our business houses are doing an enormous entrepot trade in Singapore with a wide variety of merchandise and the result of a luxury tax will be to destroy our entrepot trade, thus killing the goose that lays the golden eggs, if Government insists on collecting this tax at wholesale level based on wholesale prices. Let us be more realistic and look at some of the major snags. Local wholesale prices will undoubtedly rise and the immediate effect is to drive away our customers from the neighbouring countries to Hongkong or elsewhere where they could obtain their requirements at very much cheaper prices. Business in Singapore will eventually be reduced to a "retailer-to-consumer" basis only and the entrepot trade will virtually be at a standstill. In a country which thrives solely on its entrepot trade and where a negligible portion of the imported goods are actually consumed by its people, the proposed luxury tax will serve no useful purpose except to bring chaos to the country. Singapore import houses will, as a result of the introduction of the luxury tax, arrange for shipments of their agency lines of goods direct to the buyers outside Singapore, and thus a considerable portion of the trade will bypass Singapore. In due course, Government will have very much less revenues from taxes on profits and personal income. Heavier taxes will eventually fall on the shoulders of the average man-in-the-street, which must ultimately cause widespread demands for higher wages. I would draw the attention of the hon. Member of this House that another round of wage increases, unaccompanied by corresponding increases in entrepot trade or the local industries, is pound to seriously upset our economy, Thus crippling our prospects for merdeka. This Luxury Tax Bill is a hara kiri or suicide Bill. 11.05 a.m.

Mr Speaker, Sir, as a believer in socialism, I rise to support the principles of this Bill, but at the same time I wish to remind hon. Members on both sides of the house that there are at least two points which we must bear in mind. We have been hearing all this time about the argument on the entrepot trade and the free port status of this island. I wonder whether the Members of this House will admit that it is a fact that experience has shown that Singapore's entrepot trade and its status as a free port is quickly passing. We expect to produce our own products and export them to other countries, including, of course, our brother country, the Federation of Malaya. But whether this state of affairs will continue is a question that hon. Members will have to answer for themselves. For my part, I believe it will not continue. Sir, I find it rather hard to understand why, especially when we are faced with difficulties of expansion and the encouragement of our local industries, the Federation of Malaya should impose so many tariffs upon our products. Further, we now have Indonesia, Thailand and Burma, which for many years have been our chief customers, closing their doors upon us one by one. Therefore, we should not rely too much and always on our entrepot trade or the free port status of Singapore, especially since all political Parties in this House now believe in socialism. It is high time for us to tell the people the truth, that we must now work hard, spend less and try to save more. Therefore this Bill is, I think, most timely. The people of Singapore should realise the critical situation that lies ahead and work hard and save more. The second point that I wish to know is what items will be classified as luxury goods. The question of small cars was argued yesterday and today. Sir, last night I happened to attend a high society marriage dinner party. A friend of mine was telling me that his wife had been grumbling, that she loved the new model of the Singer sports car very much, and that she insisted on her husband booking one immediately. Sir, I understand the Singer sports car is in the category of a small saloon car. I know this family very well. The husband has a big Custom-build Ford car which sends him to and from office and his wife has a small Fiat car which she uses for shopping and marketing. And now this beautiful and lucky lady insists that they must have another car, a beautiful Singer sports car, for night driving! So, Sir, I rise to support the principles of this Bill and welcome the statement of the Financial Secretary that it will be sent to a Select Committee. I wish to point out that not only must a Select Committee be appointed to consider this Luxury Tax Bill but it must go to work on it very quickly. It should not let the deliberations drag on so that the operation of this measure will be delayed. The present caretaker Government, even though it will remain in office for the next few months only, should pass this measure quickly. Since all political Parties believe in socialism, let us be honest and admit that a tax on luxury goods is very essential. Mr J. M. Jumabhoy rose -

Is the Minister rising on a point made by the hon. Member in his speech?

Yes, Sir. The Member for Changi just now touched on the tariffs imposed by the Federation on Singapore products. I did indicate to this House yesterday that I was greatly disturbed by this development, but I said the solution was a political one. 11.11 a.m.

Mr Speaker, Sir, the term "luxury tax" is a very beautiful one indeed. In fact, when they talk about the tax on luxury goods, the people of Singapore will think that they are not going to be affected by it. However, because there is no naming of goods in the Schedule to the Bill, nobody knows exactly what type of goods will come under the definitions of this Bill. The Hon. the Minister for Commerce and Industry said that it is a matter of opinion, and, of course, that matter of opinion will lie with the Comptroller of Customs, or probably it will be decided after some of the Ministers get together and say, "We will define this and that and the other." An hon. Member: Clause 3.

All right, we have clause 3, but even with this clause, it is possible the Government may change its mind every now and then. Today it says it is having a deficit of $34 million. Next year it will put in the Estimates a deficit of $50 million and then, in order to raise that money, it says it must add on to the Schedule of luxury goods other items. That is why, Sir, when we talk about luxury goods, it is important to know where we will stop. Yesterday I said that if you confine it to such items as air-conditioning sets and radios, that seems to be quite acceptable to the people of Singapore at large. As a matter of fact, when we talk about radios, there are big ones and small ones. There are radios that are purchased by people who have plenty of money to spare and to throw away too; but there are also small radios that are usually purchased by the ordinary wage-earners. When I came to jewellery yesterday, Sir, and there again I say - Mr J. M. Jumabhoy rose -

Point of order?

Point of information, Sir.

Will the hon. Member give way? Mr Lim Choon Mong resumed his seat.

The Member for Serangoon has been placing so much emphasis on the expression "ordinary wage-earner". What is an ordinary wage-earner, Sir? Can he define him in terms of dollars?

Yes, Sir. By "ordinary wage-earner", I must exclude, first and foremost, all Ministers because, although they draw salaries, they draw very high salaries, and, of course, I exclude managerial staff; but I include the ordinary clerical staffs working in most firms, the City Council and the government offices, whose salary range will be somewhere between $150 and $400 per month. People drawing these salaries will be, in my opinion, ordinary wage-earners. I also include, of course, workmen who earn about $4 to $5 a day. Sir, I was talking just now about jewellery, and mention of it brings to mind diamonds and very expensive brooches and so on - that I think everybody will agree - but when you come down to other items of jewellery which must necessarily be included if the word "jewellery" is added to the Schedule, then you will have such things as small gold rings and bangles. Sir, the Minister for Communications and Works said that people should not keep their money in gold but should put their money to better use - put it into circulation, invest in government loans. I put it to you, Sir, that we must not always look at a problem from our own point of view, but we must be able to look at it from the point of view of the man in the street. Of course, to us it would be silly to lock up $50 in the form of a gold bangle or a gold ring; but to these people, if they put this money in the Post Office Savings Bank and if they want to make use of it at one time or other, they will find that they have to take a bit of time and some form- filling before they can get the money back, and they do not like this. It is a difficulty that any illiterate will try to avoid. You can say that they should, of course, keep it in a bank, but we know that bankers do not work free for people with less than $500 in the bank. The banks impose a surcharge of, I think, $5 per half-year and so these people find that their money, instead of increasing, is dwindling on account of having to pay a tax on cheques and again they have to contend with other difficulties. Therefore, Sir, the small man saves his money and invests it in gold - it is his savings bank - and if he ever wants money, he just goes to the pawnshop and pawns it. So if the item "jewellery" should come within the Schedule, it will affect the poor workers indeed. Sir, let us look at the problem from another angle. Today it is the intention of every political Party to raise the standard of living of the average man in Singapore. It is now accepted, Sir, that ordinary things such as small radios, small refrigerators and some transport facilities should become essential to everybody, and if we can give the workers all these things, we will be raising their standard of living. This Bill, in effect, Sir, would be to try and exclude these people from getting what we want them to get in order to improve their standard of living. In this connection, Sir, I would say that there are many clerks and workers who strive very bravely to improve their condition. They strive to get a house. They strive to get a car. They strive to get a radio. They strive to get a refrigerator. I say "strive", Sir, because these people cannot really afford to pay outright for these items. So what do they do? They go along to a company and ask for a loan and they pay back in installments - I say "installments" - so that even such goods cannot be purchased on the basis of what they can pay. They have to save and stint in order to buy them, and probably out of money loaned to them at interest. If we are to put more difficulties in the way of people in this category, Sir, then we are putting difficulties in the way of those who strive to raise their own standard of living, which I hope is our aim. Sir, let us now come to the principle of the Bill. My friends and colleagues have said that Singapore is a free port and up to today we have enjoyed that status. In fact, we have been patting ourselves on the back all this time, saying that the Federation is putting a tax on cloth, a tax on cosmetics, a tax on this and that, and we are still free from it. If this Bill is passed by the present Government, then I think the people will know that the loss of such facilities and the loss of the ability to pat themselves on the back again is the work of the present Government. The Government say that we must try and extract money painlessly for our social services. That was said by the Hon. the Minister for Commerce and Industry. With all that I have described before, I say that the largest amount of money will be coming from the people who are working, and I maintain that stand, Sir. A rich man will buy one radio. A poor man will buy one radio. There may be 19,000 people who pay income tax and could be regarded as well-to-do, but the remainder of the 1,200,000 of our population, Sir, who do not pay income tax - and many of them come under the category of people who are not well-to-do - strive to buy radios. Look up the radio licences and if you can tell me that most of those people who buy radios are the rich people, then I am ready to agree with the Government that the tax on luxuries will be on the rich and not the poor. In effect, Sir, this goes back to the Chinese axiom that if you want wool, it must come from the body of the sheep. If you want any social services, you must pay for them. If the people, according to the aims of the Labour Front, are to get higher social services, then the payment for them must not come from the rich people. It must come from the working people. This is the essence of the Bill, Sir.

Only poor people buy luxuries?

They strive to buy, Sir, as I have told the House, with money loaned to them and on an installment basis. Tell me, Sir, if I am wrong, that these people who buy goods on loan and pay installments are rich people, and if that is so, then I am sure the Oxford Dictionary is wrong. An hon. Member: The Liberal-Socialists are wrong!

They are absolutely right. Then we have another remark that many people are obsessed by the term "free trade". In fact, the Minister said that we have changed, and we have changed because of politics, and because of these changes, we must have more taxation. The position of Singapore today is, he said, different from that in 1951. I agree with him, Sir.

Thank you!

Sir, we have changed, but we have changed from a position where we were strong and where we had the Federation asking us, "Singapore, would you join us? Could we be equal partners?", to a position today where we ask the Federation, "Could we be allowed to come in?" We have now come to the position whereby when we knock at the door, it is not opened to us.

You slammed it!

We are now, Sir, licking the hands of the Federation. [Interruption.].

Order.

I come to this point, Sir, because if anybody ever dares to say that we have changed and that we must have all that, I will pin the fault down to the present Government. We were strong in 1954. We were strong early in April 1955. Our position has deteriorated only after April 1955 and has not improved to this day.

Alas!

There is another point which I regret I must point out. In considering this Bill, the Minister for Commerce and Industry said that any government can bring in any measure. If we do not bring in the Luxury Tax Bill, then another government can bring it in. It can bring it in anytime whatsoever. But I would like to point out, Sir, that we are living in a democratic country and when we live in a democratic country, we must not say that just because we are the Government, we hold the reins of government, we go wherever we like, we direct the traffic as we please, whether it is going against anybody at all. In a democratic set-up, Sir, the views of all sections of the population, even the minority, must be considered. We must try to take in all views and see that every Bill that is passed in this House will not affect any section of the population adversely. We say that this Luxury Tax Bill is going to affect many sections of the population. Of course, the biggest section that will be affected will be the ones doing business, and I must declare, Sir, that I am not a businessman and. I am not speaking from a businessman's point of view but from the average wage-earner's point of view. Then, of course, we have a very incomplete understanding of how electricity is being produced and how it is consumed. I happen to know a little bit about electricity. I have visited a power-station, so I am in a position to be able to say with some certainty how it works. In the Pasir Panjang power-station it would be economical if the load were to be kept at a constant level, so that the burning of fuel and the gyrations of its various machines would carry on at about the same rate. The amount of energy consumed is not a criterion, Sir, but if we have a good average - Mr Hart rose -

Point of order, Mr Financial Secretary?

Is this relevant to the measure, Mr Speaker, Sir?

I was just wondering how the hon. Member is going to lead up to luxuries. He is talking about electricity!

Mr Speaker, Sir, I was just trying to be helpful to the Member for Stamford (Mr J. M. Jumabhoy) on the problem of electrical consumption. Mr J. M. Jumabhoy rose -

Point of Order?

Point of order, Sir. Will I have the right to explain to this House my theory on electrical consumption, especially since I served on the Committee that was charged with the task of building the Pasir Panjang power-station?

I have ruled on the point of order already.

Sir, on this question of electricity, I was just pointing out to the Minister for Commerce and Industry how electricity is being charged and how the chain reaction as stated by my colleague affects the whole problem and I was just about to say that it is the average and not the total amount of electrical energy consumed that matters. Finally, Sir, I will come to the point on how it will affect trade. Singapore is a trading centre and whenever people are being made to do more work, we find that invariably they avoid it. There are business houses that do import and export business on an agency basis, and such being the case, Sir, it will mean that if we have a luxury tax and the goods cannot be bonded in the Harbour Board or there is no government godown to bond them, or there is any difficulty about anything, they will try to avoid making things difficult for themselves. So it will mean direct shipment of goods to the consumer countries, or transhipment, and this will make Singapore a less important city. 11.35 a.m. Mr Hart rose -

Mr Financial Secretary, in reply?

Yes, Sir. After this rather lengthy debate, Sir, two points of criticism of the Government measure emerged from the speeches made by the Opposition. The first point is that the introduction of this Bill will definitely harm the entrepot trade. The other point is that the tax will not be a tax on luxury goods but on a wide range of goods which will affect the cost of living generally in Singapore and affect the working man in particular. Both these criticisms, Sir, are entirely baseless. I cannot say more than I have already said about Government's desire not to harm the entrepot trade, about Government's realisation that the prosperity of Singapore depends upon the entrepot trade, and about Government's conviction that nothing should be done to harm that trade. With regard to the other point, I can only give an assurance that the articles chosen to be subject to this tax will be chosen with great care. They will be chosen so that they will have the minimum effect upon the entrepot trade of Singapore and the cost of living in Singapore. Finally, Sir, I should say that, whatever articles are chosen by Government for the imposition of this tax, the Assembly will, within seven days of the order being published, have the opportunity to criticise or express any views it wishes on the articles which have been chosen. Sir, I beg to move.

Question put, and agreed to. Bill accordingly read a Second time.

Sir, I beg to move, That this Bill be referred to a Select Committee with Mr Speaker as Chairman and such Members as may be nominated by the Committee of Selection.

I second it.

Question put, and agreed to. Resolved, That this Bill be referred to a Select Committee with Mr Speaker as Chairman and such Members as may be nominated by the Committee of Selection.

Order for Second Reading read. 11.38 a.m.

Mr Speaker, Sir, I rise to move, "That the Bill be now read a Second time." In October 1953 at the Asian Maritime Conference held at Nuwara Eliya in Ceylon, a resolution was adopted calling upon all Asian governments, in consultation with shipowners and seafarers, to set up welfare boards for their seamen. In Singapore up to the present moment, Sir, there is no Port Welfare Committee as such and the Singapore Mercantile Marine Fund Committee, which has been established under the Merchant Shipping Ordinance, has been trying to perform that function as best it could. There are, Sir, about 8,000 inhabitants of Singapore who work on board ships and it was therefore clearly desirable that a body be constituted which would look after the welfare of seamen in a positive manner and on which the seamen themselves would be represented. My predecessor, Sir, the Member for Cairnhill, therefore, having regard to this desirability and also the resolution passed at the Nuwara Eliya Conference, appointed a committee in September 1955 to consider the setting up of an organisation for port welfare work in Singapore, and the Bill that is now before hon. Members embodies the recommendations made in the Report of that Committee. I wish to convey my thanks to that Committee, Sir. It is now proposed that this Board should administer the Singapore Mercantile Marine Fund, but the Government has also seen to it that the proposals would not interfere with the considerable autonomy of existing organisations which, in most cases, are supported by voluntary contributions. One aspect, however, Sir, which I wish to emphasise in this legislation is that the Board is being empowered to assist in activities directed at providing training facilities for seafarers or persons intending to become seafarers. I am sure this will be welcomed by hon. Members. Though the Singapore Mercantile Marine Fund Committee has up to a certain extent been able to perform the function of co-ordinating the activities of various bodies engaged in welfare work, yet there are certain shortcomings which it is desired to remedy through this Bill. In brief, these shortcomings are that the title of the Singapore Mercantile Marine Fund Committee does not convey much to the ordinary seafarer and, as such, it is something which is remote to him. The constitution of the Mercantile Marine Fund Committee does not provide for representation of seafarers whose welfare was the concern of the Committee. This is a glaring defect and not in accordance with democratic principles. Also the Singapore Mercantile Marine Fund Committee would not of its own accord go out of its way to cover the exploration of new fields of seafarers' welfare and the creation of means to meet such new requirements. Thus this Committee performs its functions in a negative way. The proposed Board would be able to perform its functions in a more positive manner. Sir, this is a relatively simple Bill and therefore it does not call for comment clause by clause; but I would like to draw the attention of hon. Members particularly to two clauses. Clause 3, the title of "the Seafarers' Welfare Board" is an apt one in that it establishes beyond doubt that the work of the Board will be confined to seafarers and not to port workers generally. Clause 4 (1) provides for the membership of the Board. It provides for four Government members, four representatives of shipowners' associations, and four seafarers' representatives. It also provides for four members of religious organisations, as opposed to one in the present Singapore Mercantile Marine Fund Committee, and it is hoped that by this provision various religious groups may be able to appoint representatives on the Board, so that the religious requirements of seafarers may be catered for more efficiently. An unofficial ladies' organisation called the Singapore Seafarers Entertainment Committee has up to now been performing valuable work among seafarers, and it is felt that it would be advantageous to include two ladies with experience of this type of welfare work amongst the members of the Board, and therefore there is provision for the inclusion of two ladies to be members of this Board. Sir, I am sure the House will welcome this Bill which sets up the proper machinery for the welfare of seafarers in Singapore. Sir, I beg to move. Question proposed. 11.44 a.m.

Mr Speaker, Sir, in welcoming this Bill, which seems to me to be realistic and practical, I only want to make one point. In clause 4 (1) (d) is stated "the Board shall consist of four persons representing seafarers." The definition of "seafarer" at the top of page 2 means "a master, officer, seaman or apprentice who is ordinarily employed on board local trade, home trade or foreign trade ships...". May I suggest to the Minister that it might be reasonable that, of those four persons representing seafarers, two should be selected from the master/ officer group and two from the seaman or apprentice group, so that all interests can be represented on the Board? 11.45 a.m.

If it please you, Mr Speaker, Sir, I am happy to support this measure which seeks to co-ordinate the somewhat sectional approach to the welfare of seafarers in the past. There is considerable room, Sir, for assisting our seafarers and I am particularly happy to note clause 6 (a) (ii) which gives the Board powers to provide for training facilities for those who desire to be seafarers and for seafarers themselves. I am also happy to note the provision for four persons representing seafarers on this Board. I have no doubt whatsoever that the Minister, in making the appointments, will consult the relevant trade unions, both of masters and officers and of seamen, before making the appointments. This measure is late, Sir, but I am glad to see that it has finally arrived before this House. I do hope and I do believe that an organisation of this nature will not only be able to coordinate the activities now in existence, but will also be able to infuse a new spirit in the approach to the seafarers' problem and that we will have in that field that necessary element of anxious search for opportunities to raise their educational and their economic level. I do congratulate the Government on bringing this Bill before the House. 11.47 a.m. Mr J. M. Jumabhoy rose -

Mr Minister, in reply?

Yes, Sir. I will take into consideration the point raised by the Member for Tanglin which is also endorsed by the Member for Cairnhill, and I will consult the respective trade unions when representations are made; but I do not promise that I will have the ratio of two in the officer category and two in the seaman category. Sir, I also wish to reciprocate the congratulations given by the Member for Cairnhill in that he was primarily responsible for setting up that committee, and I think he should get a share of the credit which Government will get out of this measure.

Question put, and agreed to. Bill accordingly read a Second time.

Committee stage, what day?

Now, Sir. Mr Speaker, Sir, I move, That the Assembly do resolve itself into Committee on the Bill.

Sir, I second it.

Question put, and agreed to. Bill considered in Committee.

Clauses 1 to 10 inclusive ordered to stand part of the Bill.

Sir, I move, "That the Bill be reported to the Assembly."

Question put, and agreed to. Bill reported, without Amendment.

Third Reading, what day?

Now, Sir. Sir, I move, "That the Bill be now read the Third time."

Sir, I second it.

Question put, and agreed to. Bill accordingly read the Third time.

Order for Second Reading read. 11.51 a.m.

Mr Speaker, Sir, I beg to move, "That the Bill be now read a Second time." Members are aware that the tenure of office of City Councillors, who were due to retire in July 1956, was extended to 1st December, 1956. It is again necessary to provide for the extension of the tenure of office of City Councillors beyond 1st December, 1956. This Bill seeks to extend the life of the City Council until December 1957, but if elections can be held earlier under the new Local Government Elections Bill when it is enacted, this temporary Bill will be repealed. This Bill, as it stands, follows much the same pattern as the previous legislation extending the tenure of office of City Councillors. Hon. Members, however, have been given prior notice of the amendments which I propose to move in the Committee stage the effect of which is to omit the provision for extending the tenure of office of appointed Councillors. Clause 2 (d) is also an additional provision and seeks to dispense with the necessity for holding elections to fill casual vacancies without prejudice to the requirement to hold elections should the number of unfilled vacancies exceed one-third of the total number of elected Councillors. Sir, I beg to move. Question proposed. 11.53 a.m.

Mr Speaker, Sir, the continued amendment to this Bill is becoming something of a farce. The City Council elections should have taken place in December 1954. These were postponed. The City and Island Council elections should have been held in about June 1955. The present Government scrapped the local government scheme recommended by the Rendel Constitution, and they are taking more than two years to put a new scheme into operation. As no City Council elections have been held since December 1953 - or three years ago - it means that the last third of elected City Councillors will have completed their term of office of three years under this Ordinance at the end of this month, and that henceforth they will join the other two-thirds in an extended life. This therefore means that the City Council becomes a wholly nominated body from December this year, and I am therefore unable to understand the amendment which the Assistant Minister is putting forward as an afterthought to differentiate between those members of the City Council nominated by the Governor in Council and those members of the City Council who, in effect, have been nominated by this Assembly, by extending the life of the latter and not of the former. In view of the fact that there are some members of the City Council who were elected in the dim distant era of December 1951, whereas others have been nominated by the Governor in Council within the life of the present Government, there seems no justification for this differentiation. If the City Council's life is to be less than a year, what is the point of bringing in new inexperienced Councillors to work for a few months under an expiring constitution? Sir, while I agree that the life of the City Council must be prolonged in the circumstances facing us, I do disapprove of the amendment to terminate the life of those members nominated by the Council of Ministers as appearing to be unnecessary and pointless. 11.55 a.m.

If it please you, Sir, I am glad to note the moderate tone of approach of the Member for Tanglin to this matter and I think the bona tides of this Government must be recognised when we remember that, because of necessity, we seek to extend the life of elected Members of the Council who were elected at a time when the Progressive Party - a fire-eating dragon - was in the ascendant; that we are, in fact, extending the life of Progressive Party Members who, it is our genuine belief, are no longer representative of the people of Singapore. The Labour Front has approached this problem with considerable thought and an anxious desire for justice for the people. We would have preferred so much more to have a clean slate, a completely clean slate, and an opportunity for the people of Singapore to have representatives who, in the circumstances of today and with the experience which they have of the conduct and the misconduct that has taken place in the City Council, they would have perhaps not chosen the same representatives and would choose others more worthy of the honour of speaking on behalf of their fellow citizens. But this we cannot do and therefore the question is what can we do? We must have a City Council. It is essential for the life of this territory and we thought it fair that those who have actually been endorsed by the public, even though they are in a majority - the Progressive Party representatives - because the public have endorsed them, they should continue, though they have sought to make of the City Council a battleground for shady political maneuverings. But, Sir, though the technical aspect put forward by the Member for Tanglin is accurate and their continuation in office is, in fact, a nomination by this Assembly, this Assembly is not nominating them as individuals; it is not giving the seal of approval to those persons who are elected Members now in the City Council. It is saying no more than this - we are in a quandary how to continue the City Council since we cannot hold elections; therefore, since those gentlemen have been approved by members of the public in the past and since they want to continue in office without resignation, by all means continue for yet one more year, and then, pray God we will have a clean slate of it all. But no such considerations, Sir, can apply to those who have been nominated under pressure of political influence in a totally different political atmosphere and who have, in the main, shown themselves unworthy of the position which they hold in the unpleasant, blatant manoeuverings, utterly cynical of the welfare of the people of Singapore. I know, Sir, that the Labour Front will be charged with nepotism. We of the Labour Front, Sir, for more than 18 months have kept our hands clean. No Party that I know that has been in power in any country has kept its hands as clean as we have. Not only have we been honest in the appointments we have made; not only have we never tried to give jobs to members of the Labour Front, but our record is clean as well as our policy is clean. I know, Sir, that in the debate that will follow, those who represent Progressive Party interests, not the people's interests, will say, "Ah, yes, the Labour Front now is in office and is going to steamroller the position and will seek to appoint its own members in order to gain control of the City Council." Sir, we know our sincerity of purpose and we know that we will be laying ourselves open to this unscrupulous charge by refusing the extension of life of the nominated Members. But the people are crying out against the machinations of the City Council Members of today. There must be some fresh blood, some honest people who will not try and take advantage of their position in the City Council for horrible political selfish motives. It is not with pleasure, Sir, and it is due to no Machiavellian desire to dominate the City Council that the Labour Front has taken the decision in association with its colleagues of the Alliance to say, "No, an end to these nominated Members. Let us have some who will be truly representative, responsible people representing interests -"

On a point of clarification, Sir. May I ask the hon. Gentleman if he is expressing the views of the Government?

I am expressing the views of the Labour Front. If I may continue, Sir? I say it is in no spirit of seeking to steamroller a measure for party political motives but with a genuine desire to help the people of Singapore that we are approaching this problem, and we say to this House: the people of Singapore have had a bellyful of the present nominated and some of the elected Members of the City Council. They will not tolerate even a further year's extension. There has been enough damage done. I say to this House that it is entirely in the spirit of service for the people that the Labour Front now lays itself open for the first time to a charge of nepotism. We have taken criticism before and with our sincerity of purpose and knowledge of our own integrity we will take criticism again. We know it might well be flung, but we know our honesty of purpose and are prepared to carry it through. I say, Sir, it is essential for the welfare of this country and the administration of its municipal services that there should be an end, an immediate end, to the present nominated Members. Mr John Ede rose -

Point of order?

Point of explanation, Sir. Arising out of what the hon. Member has just said, he made the statement that I was charging the Labour Front with nepotism. I made no such statement in my speech. 12.04 p.m.

Mr Speaker, Sir, I do not wish to take up too much of the time of the House. The matter has been amply clarified by my friend the Member for Cairnhill. I only just wish to say this, Sir - that we too on our side are not happy at this extension of the life of the present City Council, but it is a necessary evil arising out of the constitutional changes that have been set in force as a result of the Rendel Constitution. The Member for Tanglin raised one point, and that was why it was necessary to get inexperienced Councillors in place of the present experienced nominated Councillors. Sir, it is not possible to hold elections and replace those Councillors who were elected, but we can surely bring in new blood which is very necessary in this City Council, which is now like a stagnant pool of dirty water, and try to freshen it up a bit through appointing new nominated members; and that, I think, Sir, is why the life of only the elected Members is going to be lengthened. 12.05 p.m.

Mr Speaker, Sir, frankly, as a City Councillor myself, I had no intention of speaking on this subject, but the question of elected or nominated Councillors has cropped up and I feel that I should explain my stand. As a City Councillor who has served for five years, I certainly feel unhappy at this extension. It is time that the City Council should have a change because the members on the Council have served their term of not only five years but up to six years even without fresh elections being held. This being a democratic country, I feel that fresh elections should come immediately, but the fact is this: the machinery of government election is such that we are compelled to serve a year longer if this House adopts this Bill. But if this House or the public call upon me to serve as a City Councillor for one more year, I feel it is my duty to do so. I am not reluctant to serve anybody. 12.07 p.m.

Mr Speaker, Sir, I had not intended to speak at length on this subject, but after hearing what the Member for Cairnhill said, I felt that I cannot help but stand up and reply to what he said. It gives me a real sense of unhappiness, Sir, to see a responsible Member standing up in this Assembly and speaking against a very responsible institution like the City Council. I am not defending anybody, but I have this to say, Sir. The City Councillors are not here to give the Member for Cairnhill a direct reply, and it would, I think, be better if the hon. Member would deem it fit to publish his remarks in the Press under his own name so that they can answer him direct and not for him to hide in this Assembly -

I do not hide in this Assembly, Sir. I object to the Member's remark, Mr Speaker, Sir.

Is it a point of order?

Yes, Sir. The suggestion is that I am hiding in this Assembly. That is an attempt to limit my right to freedom of speech. If I err here, Sir, this Assembly can always correct me by a committee of enquiry or otherwise.

It is, of course, a difficult point of order. Hon. Members, when they speak about members of another place, should be very careful of what they say because they are, in fact, protected by privilege. In this particular case, I think the hon. Member merely indicated that there is a privilege which does protect Members of this House.

Thank you, Sir. I certainly think there is a privilege protecting this House. Previous to this, Sir, whenever an accusation is thrown by Members of the Opposition, they are asked to give facts and figures. They are asked to substantiate their cases. I would very much like such accusations to be substantiated, and substantiated in the newspapers and not just in this House, Sir. We have heard that Members on the Government Benches are honest, very worthy, and they have shown their clean hands. I do not doubt for a moment that they are clean and good and worthy, but I think the more important thing is that we must not judge ourselves. The judgment must be left to the people. In the same way, Sir, the City Councillors have done what they think is in the best interests of the people of Singapore. It is not for Members of the Assembly to judge their conduct. It is up to the people of Singapore to pass judgment on them, and I say that if this House is really keen that the people of Singapore should pass judgment on the City Councillors, then let there be fresh elections, and fresh elections at the earliest possible moment. I am for it. If the Government will scrap this Bill and have elections next month, I will support their move. The only thing is that they cannot, and they cannot do it, not because anybody is preventing them from doing it, but because they have delayed matters themselves. Do not tell this House that you are unhappy to allow this state of affairs to go on. You want fresh elections. You want a clean slate. You have Councillors who are not worthy of being in the City Council and who are still sticking there now. The powers are in the Government's hands. It is up to them to do it. The Government have not done it. The fault lies with the Government. Indeed, Sir, when another hon. Member stated that the City Council is just like a stagnant pool of dirty water, I sometimes feel that I must agree with him, because it includes the hon. Member himself.

No, it does not.

Wake up, wake up!

I am certain, Sir, that it does because the period referred to covers the tenure of office -

No.

Sir, I will say this - fresh elections are; due. In fact, they are overdue. We want the people to cast their verdict. We want City Councillors who really represent the people, and I will support any Bill which will make the holding of elections as early as possible. 12.13 p.m.

Mr Speaker, Sir, I am indeed very unhappy about the whole affair. I have reluctantly to support this Bill. I am, however, happy that the Member for Serangoon and the Member for Cairnhill and many other hon. Members agree that it is high time for us to have a glimpse into this "dirty water". Sir, I agree with the sentiments of the Member for Serangoon that it is only the people of Singapore who should pass judgment on the efficiency and integrity of the City Council. As far as I am concerned, judging by the complaints that I have received from the general public, it is, I think, high time for us to clean up the City Council. Let us take a look at one City Council problem - the hawkers' problem. What have our City Fathers done to settle this problem? My memory is rather weak, Sir, but I think I can remember one City Councillor proposing that hawkers should have to pay income tax! There is also another Councillor who said, long ago, that hawkers are capitalists! These two examples alone, I believe, will illustrate how many of those sitting on the City Council really understand the problems of the people of Singapore. Although I support the abolition of these nominated City Councillors, I wonder whether it is Government's intention to nominate new members - "new blood" is the expression used - who may turn out to be "yes" men-one hon. Member referred to this move as "political manoeuvering". I wish the Government will bear in mind, when they nominate new Councillors, not to have any more "yes" men but true civic leaders. 12.15 p.m. Mr Tan Theng Chiang rose -

Mr Assistant Minister, in reply?

Yes, Sir. As hon. Members are aware, there have been no City Council elections since December 1953, and the life of the present City Council has been extended since that year by similar Bills as the present one. The Local Government Bill, 1956, and the Local Government Elections Bill, 1956, Sir, are now in the Select Committee stage. It is considered that elected Councillors could continue to hold office as it is preferable that new City Council elections should be held under the provisions of the new Local Government Elections Ordinance. In any case, the previous City Council Elections (Temporary Provisions) Bill dispensed with the necessity of revising the electoral register, and so they are out of date. With regard, however, to the appointed Councillors, some of whom have been holding office as far back as 1951 and all of whom are due to retire on 1st December, 1956, the reason why the present Bill seeks to end their tenure of office while elected members continue for another year, is to enable fresh nominations to be submitted for consideration. Members will appreciate that there is a distinction between elected and appointed Councillors, and this measure will relieve appointed members of their responsibilities after many years of valuable service and also allow some fresh blood to be introduced into the Council.

Question put, and agreed to. Bill accordingly read a Second time.

Committee stage, what day?

Now, Sir. Mr Speaker, Sir, I move, That the Assembly do resolve itself into Committee on the Bill.

Sir, I second it.

Question put, and agreed to. Bill considered in Committee.

Clauses 1 and 2 ordered to stand part of the Bill. Clause 3-

Mr Chairman, I move, In page 2, line 17, to leave out the words "and appointment".

Question, "That the words proposed to be left out, be left out," put, and agreed to.

Mr Chairman, I move, In page 2, lines 24 and 25, to leave out the words "shall continue to hold such office until the first Saturday in December, 1957" and there to insert "shall, in the case of appointed Councillors, continue to hold such office until the first Saturday in December, 1956, and shall, in the case of elected Councillors, continue to hold such office until the first Saturday in December, 1957". Question proposed, "That the words proposed to be left out, be left out."

On a point of information, Mr Chairman, Sir. I would like to know from the Government what it intends to do in the case of seats rendered vacant by resigned Councillors, because this amendment does not mention it. As far as I am aware, Sir, there is a vacancy in the City Council caused by a Member's resignation, and I wonder if Government has any intention of holding a by-election to fill that vacancy.

That contingency is provided for in clause 2 (d) of the Bill, Sir. It is not the intention of the Government to have a by-election in the case of the resignation of the Minister for Commerce and Industry as a City Councilor.

Sir, I would like some clarification from the Minister for Local Government, Lands and Housing, and that is, whether the views expressed by the Member for Cairnhill regarding nominated Councillors are also the views of the Government.

We have passed that stage. We are now on an amendment.

Question, "That the words proposed to be left out, be left out," put, and agreed to. Question, "That the words proposed to be inserted, be there inserted," put, and agreed to. Clause, as amended, ordered to stand part of the Bill. Long Title-

Mr Chairman, Sir, I move, In page 1, line 3, after the words "office of", to insert the word "elected".

Is it a consequential amendment?

Yes, Sir.

Question, "That the word proposed to be inserted, be there inserted," put, and agreed to.

Mr Chairman, Sir, I beg to move, "That the Bill, as amended, be reported to the Assembly."

Question put, and agreed to. Bill reported, with Amendments. Amendment to title reported.

Third Reading, what day?

Now, Sir. Mr Speaker, Sir, I beg to move, "That the Bill, as amended, be now read the Third time."

Sir, I second it.

Question put, and agreed to. Bill, as amended, accordingly read the Third time.

I think this is an appropriate time to suspend. I will take the Chair again at half-past two. Sitting accordingly suspended at 12.27 p.m. until 2.30 p.m. Sitting resumed at 2.30 p.m.

Mr Speaker, Sir, I have His Excellency the Governor's authority to move, That this Assembly, pursuant to subsection (1) of section 106 of the Income Tax Ordinance (Chapter 166), resolves that the Second Schedule to the said Ordinance be varied by substituting therefor the following schedule with effect from the 1st of January, 1957: - SECOND SCHEDULE (Section 42) Chargeable Income Rate of Tax $ For every dollar of the first 1,500 5 per cent " " " " " next 500 6 per cent " " " " " " 1,000 7 per cent " " " " " " 2,000 8 per cent " " " " " " 2,000 10 per cent " " " " " " 3,000 12 per cent " " " " " " 5,000 15 per cent " " " " " " 20,000 20 per cent " " " " " " 10,000 25 per cent " " " " " " 5,000 30 per cent " " " " " " 5,000 35 per cent " " " exceeding 55,000 40 per cent Sir, this motion seeks to amend the Second Schedule to the Income Tax Ordinance. The first amendment to the existing Schedule is that the rate of tax on the first two slabs of chargeable income, which are at present three and four per cent respectively, are changed to five per cent. The effect of this change is illustrated by the following figures: An individual with a chargeable income of $200) will pay $10 in tax instead of $6. An individual with a chargeable income of $500 will pay $25 instead of $15. An individual with a chargeable income of $700 will pay $35 instead of $23. An individual with a chargeable income of $1,000 will pay $50 instead of 35 Thereafter, individuals will pay $15 more than they at present pay right up the scale. It has been said that these increases are likely to cause hardship. This, Sir, I cannot believe. The maximum increase in which these new rates result is $15 and this is due in respect of chargeable incomes of $1,000 or over. An increase of this order is within the means of all taxpayers to pay. The second amendment to existing rates of tax is the insertion of a new rate of 25 per cent which is applicable to the $10,000 slab of chargeable income immediately above the $35,000 point. The next $5,000 is chargeable at 30 per cent and the next succeeding $5,000 at 35 per cent. This takes us up to $55,000 worth of chargeable income above which point the rate of tax will be 40 per cent. The effect of this increase in tax on chargeable incomes in the higher ranges will be as follows: In the case of single individuals: On a chargeable income of $50,000, the old rate of tax was $4,030. The new rate of tax is $4,045. On a chargeable income of $75,000, the old rate of tax was $15,230. The new rate of tax is $18,195. On a chargeable income of $100,000, the old rate of tax was $22,730. The new rate of tax is $28,195. In the case of resident individuals who are married and have no children: On a chargeable income of $75,000, the old rate of tax was $14,630. The new rate of tax is $17,395. On a charge income of $l00,000, the old rate of tax was 22,130. The new rate of tax is $27,395. And so on. These increases, Sir, are fairly substantial but I do not think that they will cause hardship to any taxpayers. It can be argued that taxpayers in these higher groups of income could pay more tax. That is probably true and I have no doubt that the two Governments will come round to this way of thinking in due course. At the same time, however, I doubt if it is generally realised to what extent taxpayers in these income groups contribute in the way of income tax. In this connection, I invite attention to the 1955 Annual Report of the Income Tax Department. From that Report, it will be seen that some 19,000 individuals contribute some $22 million worth of tax. Of these individuals, some 1,200 whose chargeable incomes exceed $30,000, on six per cent of the total contribute $16 million in tax which is 68 per cent of the total. While it can no doubt be argued that these individuals could pay more, even the most biased critic must admit that they already make a not unsubstantial contribution to the general welfare of the people of Singapore. The yield of these proposals is now estimated at slightly over $3� million. Sir, I beg to move.

I second it. Question proposed. 2.36 p.m.

Mr Speaker, Sir, this is one of the devices to raise more money, as I understand it from the Hon. the Financial Secretary: by changing the percentages of tax chargeable on incomes. Sir, this morning we opposed the principle of taxation generally and I can show hon. Members one or two ways by which to avoid this increase and even other increases in tax. One easy way is to get control of our hard currency earnings-U.S, dollars. For years and years, the United Kingdom has been utilising oar dollars and taking full advantage by saying that the money was to be used for the good of the Commonwealth whenever we raised this question in the Legislative Council. Now, Commonwealth countries are independent countries. They remain in the Commonwealth for their mutual good. Our earnings should be given to us. I quote one example of how we are being fleeced indirectly. We are getting consumer goods from America via Hongkong and you can find them anywhere in the market, Sir. Singapore pays the black-market price for them. How is this done? Non-business people may not be able to understand how unless they take the pains to find out. We ask the Government for part or whole of our hard currency earnings to import goods from hard currency countries.

Order. I think the hon. Member is now embarking on a debate on something quite extraneous to the motion before the House, which is an increase in the percentages of income tax. He is quite in order, of course, in mentioning it but I would ask him not to enter into a debate on it.

Thank you, Sir, for pointing that out. I am not debating as dollars - An hon. Member: Cents.

- but I am debating on the point that if you save money through our hard currency earnings it is not necessary to have these changes in the income tax. So if you, Sir, can bear with me for another two minutes, I can explain that point. America ships goods to Singapore via Hongkong which means only transshipment. The steamers touch at Hongkong and black-market money, or free rate is paid there. The bills of lading are given to a merchant and we have to pay black-market money to the Hongkong merchants. In other words, we agree to pay more Malayan dollars -

Order. I do not think that the hon. Member has taken my point and that is: he is in order if he just mentions the fact of American dollars but if he goes into detail, I must hold that he is out of order.

Thank you, Sir, for pointing out again that I should not go into details but then it will be difficult for the Government side to understand. In other words, in short, if our hard currency earnings are kept with us to be utilised by us, no tax or any changes in tax are necessary at all and the United Kingdom has no business whatsoever to utilise our hard currency earnings.

R. Jumabhoy & Co.!

There is no need for you to be so -

Order, please.

Can I have your guidance, Mr Speaker, Sir, if it is in order to move an amendment at this stage?

Will the hon. Member please indicate what his amendment is?

Thank you very much, Sir. I move, In line 1 of the Second Schedule, to leave out- $ "For every dollar of the first 1,500 5 per cent" and insert- $ "For every dollar of the first 500 3 per cent " " " " " second 500 4 per cent " " " " " third 500 5 per cent". Amendment handed in.

Do I understand from that amendment that the hon. Member is endeavouring to restore the status quo in so far as the lower income group is concerned?

That is right, Sir.

The hon. Member is in order.

Sir, in proposing this amendment, as you have said, I am trying to restore the old percentages before the proposal to reduce the personal relief. It appears to me, Sir, that the Government is not consistent in its policies. I presume that the withdrawal of the Income Tax (Amendment No. 2) Bill was due to the heavy pressure from the public and it appears to me that since there is no heavy pressure from the public on the question of the rates of percentage on the lower income group, the Government is not proposing to restore the old rates of income tax for the lower income group. This is wrong, Sir. It is not because the public is not protesting against these new increased rates but it is because the public is not aware of these new rates. The concentration of the public was on the reduction of the personal relief and this was just a sideline which may have missed the eye of the common man. I hope the Government will accept my proposal to go back to the old rates. If the original motion is accepted, Sir, I am sure that it will cause much more hardship to the lower income group. It is surprising that the Hon. Financial Secretary said, "It will not necessarily cause much hardship to the workers." I am afraid that he is not aware of the conditions of living of the lower income group, as he is a Minister and he lives on a far higher plane than the lower income group or the common people. I will say, Sir, why it will affect the workers if this motion is adopted. Take, for instance, a bachelor who earns $3,500 a year. The $3,000 is free of tax and the balance of $500 is to be taxed. According to the new rates, Sir, the tax on the $500 will be $25, but on the old rate he will be taxed $15 which, in the opinion of the Government, is a very small amount. The increase is only $10 and it does not matter. If the total income of a married person is $6,000 a year, $5,000 is free of tax. Based on the new rate, the tax on the extra $1,000 will be $50 and on the old rate, the tax will be $40 - a difference of $10. Now, this $10 may appear to the Government to be a very small sum but I must point out, Sir, that this $10 is a very big sum to the ordinary worker. A worker who is a bachelor with a very small income of, say, a few hundred dollars a month may have to support his parents or his younger sisters and brothers, and in the case of a married man, he has to support his wife and children. Now, this $10, as far as I know, may be enough for three or four days' marketing. I have known of cases of the poorer class of people who spend a dollar a day on marketing and this $10 will allow them and their family, I should say, to exist for ten days. I am afraid that the Government is wrong in thinking that it would not affect the workers at all when they say that $10 is just a small figure. A drop in the ocean will not matter much but that "drop of water" in terms of dollars and cents will matter very much to the poor worker. I hope that Members on both sides of the House will realise the hardship on the lower income group and will accept my amendment.

Mr Speaker, Sir, I rise to second the amendment and reserve my right to speak at a later stage. Question proposed, "That the words and figures proposed to be left out, be left out." 2.49 p.m.

Mr Speaker, Sir, the Member for Queenstown (Mr Lee Choon Eng) seems to have misunderstood the position as indicated both in the opening speech by the Hon. the Financial Secretary and in the debate on the Second Reading of the Appropriation Bill. As I understood, Sir, it was not a question of the desire of this Government for increased taxation in these lower groups that brought about either the attempt to reduce the personal allowance or the very mild - what they call - tidying increase in these lower incomes. It has been made abundantly clear, Sir, that income tax is a pan-Malayan subject and that there is need for co-ordination of our efforts with the Federation and it must surely be obvious to hon. Members in this Assembly that in matters of this and any other nature where there is co-operation between the two territories, there must be ultimate compromise proposals which are perhaps neither completely satisfactory to the Federation nor completely satisfactory to this Assembly. I think, Sir, it can but embarrass the Government gravely if we seek to upset unduly an agreement reached by it after full consideration with the Federation and this, in fact, is what this amendment seeks to do. There has been a complete agreement achieved by way of compromise with the Federation on income tax proposals for next year. Despite that, Sir, in view of matters that transpired both in this territory and the Federation and as a result of the friendship existing between our two Chief Ministers, there was a concession of a considerable character by the Federation to our wishes. For this, I think we ought to express both our appreciation and a sense of relief that they so conceded. To seek, Sir, now to overthrow the agreement arrived at in such friendly spirit with the Federation for so minor a matter is not to seek the welfare of this territory or even the poorer people therein but to seek to embarrass the Government purely and simply. We must recognise that every time we approach taxation proposals, they are a pan-Malayan subject. Sir, the Member for Queenstown said that $10 could mean ten marketing days. I would remind him that according to his own figures, before any man pays any tax at all, he must earn $3,500 if he is a bachelor, that is, he earns $10 a day and for the whole year, he pays $25 - $2 a month - which means that the Member for Queenstown is trying to save him $10 or one day's pay. Sir, if this bachelor is really living on $1 a day, he is making an extraordinary saving out of which he can well afford a far larger contribution to the country. As for the married man, Sir, he is paying this extra $10 only if he earns $6,000 a year - $500 a month - and out of that $500 a month, he is being asked to pay 5/6th of $1 per month. I do not know exactly how much 5/6th is, Sir. I should say it is about 80 cents a month. Now to call a man earning $600 a month poor and to seek to embarrass the Government because he has to pay 80 cents a month extra is to exaggerate and bring into disrepute the whole democratic procedure and the purpose of a debate on the Budget.

They do not understand the -

Order.

I ask hon. Members to take seriously into consideration not only the obligations of the Government towards its counterpart in the Federation but the obligations of the Opposition to act with responsibility and to maintain the dignity of Singapore in its relations with the territories across the Straits. I cannot believe that the Opposition - the gentlemen who face me - would want the Government to dishonour its arrangement with the Federation on so small a point. I do ask them, though the amendment looks attractive as a political catch motion, it is, in essence, a grave reflection upon the sense of integrity of the people of Singapore and the sense of co-operation with the Federation.

On a point of information, Sir. Have I got a right to reply?

No.

Sir, I have no comments to make on this - most of them are obvious - but I have one question to ask of the leader of the Liberal-Socialist Party who seconded the amendment, and that is: Does his Party stand for the breaking up of the pan-Malayan structure of income tax on this small point?

Not so small.

Comparatively. 2.56 p.m.

Mr Speaker, Sir, at the conclusion of yesterday's debate, the Hon. the Financial Secretary made some very happy remarks on the new income tax rates. He was, if I remember rightly, replying to some questions made by the Member for Tanglin (Mr Ede). He quoted some relevant figures to show the amount of tax payable under the new rate as compared with the old rate. The Hon. the Financial Secretary contended that the new structure would be well received by everybody primarily because the increase in tax is insignificantly small.

Order. I just want to make it quite clear that we are on an amendment which affects the first line of the Schedule. If the hon. Member is speaking on the amendment, of course, he is quite in order.

Thank you, Sir. In fact, I am supporting the amendment. At least to his mind, Sir, it is small enough and the taxpayer will not be bothered about it. Sir, I do not deny the fact that the increase under the new rate may be small - only a few dollars - but then whether the taxpayer will mind it or not is a different matter. I believe, in all sincerity, that he will mind for whether the differential is $5 or $15, it still means that the taxpayer will have to forego that sum of money for ever and that he will have to curtail his expenditure by that amount. But, Sir, the point I wish to make is something more fundamental and it is this. Is the new rate a just one? Let us examine the position before us. I have prepared here a short but comprehensive table showing only the differential increase under the new rate as compared with the old rate but in greater detail than the Hon. the Financial Secretary cared to tell the House yesterday. The table here, Sir, I hope can be easily followed by hon. Members without going into complicated statistics. The point of justice or injustice which I said just now is clearly indicated not in the differential increase but in the percentage increase. Looking at column 5, hon. Members will see that the percentage increase in income tax plunges downwards as the chargeable income rises upwards. On a chargeable income of $500, Sir, the percentage increase on the old tax is 67 per cent -

On a point of information, Sir. What is the fifth column? I mean I have heard -

Is the hon. Member giving way?

Yes.

I have heard of fifth columnists but I have not heard of the fifth column, Sir. Is the hon. Member referring to any particular document?

Sir, I did not say, "fifth column" but I said, "column 5" - if I am not mistaken. According to my table, I have "column 5" here. As the amount of chargeable income increases gradually to $1,000 and $2,000, Sir, and up to $7,000, the percentage increase in tax payable drops to three per cent. The position is even better or worse depending on how you look at it. When the chargeable income is $10,000, Sir, the percentage increase in income tax is .35 per cent and at $35,000, the increase is .03 per cent. I hope that hon. Members are able to follow the line of my argument. Hon. Members: No.

It is only above $35,000 that the percentage increase begins to rise again. Sir, I do not wish to appear malicious or insinuating but I would like to ask the Hon. the Chief Secretary or the Hon. the Financial Secretary or even the hon.

Mr Sutherland this question: Under which chargeable income group do they come? We note from the Budget Estimates, Sir, that the Hon. the Chief Secretary draws an annual income of $28,500 while the Hon. the Financial Secretary draws $24,900. Assuming that they enjoy the benefit of all their personal allowances and relief, I venture to say that they are within the $7,000 to $15,000 bracket. They are within the privileged group whose percentage increase of tax is even less than one per cent. It is obvious, Sir, that the new rates, contrary to some opinion, are totally unjust and undemocratic. They are designed to benefit those in the higher income group, in particular, in the senior ranks of the bureaucracy - Permanent Secretaries, Police Commissioners, directors and controllers or heads of departments and such like. It is not at all surprising, Sir, that Mr Sutherland appeared to be very jubilant in welcoming the new rate yesterday. Having drawn attention to this fact, I am sure that hon. Members will find it fit to oppose the motion.

I take it that the hon. Member does not say, "oppose the motion" but "support the amendment". The hon. Member is talking on the amendment, is he not?

Thank you very much, Sir. In fact, I am supporting the amendment.

Sir, I should like just to express a word of high appreciation for the ability of the Member who has just sat down. I understand that he has succeeded in doing what I have still been unable to do under the expenditure of a large amount of time and that is to work out my income tax. I always have to have considerable assistance in it and I am delighted to hear that he seems to have been able to work it out and I am even more delighted to hear that I think he tells me that my income tax is going down while the rates are being put up. 3.03 p.m.

Mr Speaker, Sir, let me first answer the question by the Hon. the Minister for Commerce and Industry. He asks us whether our Party stands for breaking away from the pan-Malayan structure as this measure was put forward by the Government of the Federation of Malaya. The Federation of Malaya cannot put forth such a suggestion unless it consults the Government of Singapore. In effect, it can as well come from the Government of Singapore. On a question like this, it is not possible to ask a Party to support any measure when, in the first instance, they have never been consulted and nothing of this sort has even been whispered to them. For a Member of the Labour Front to ask my Party (the Liberal-Socialist Party) here to support any measure because it has been fixed up by another Party with their own Party, I think this is asking too much.

With another Government and not with another Party.

Order.

If any Government wants the support of an Opposition Party, it is only fair that the Government consults that Party. If the Government wants merdeka, the Government should realise, first of all, that if it wants a unanimous approach, it must get hold of all the Opposition Parties for a national conference. It should adopt this attitude and not ask for support after they have committed themselves. However, Sir, speaking in support of the amendment, I will just draw attention to one or two facts. Without the $500-flooring being removed now, the maximum tax collection envisaged will be in the region of $1,500,000. Taking off that $500 relief now, and restoring it to the $3,000 level, it will work out to roughly a quarter of a million dollars. This sum I suggest, Sir, is small and negligible and should not be implemented. Looking at the table and remembering what the Hon. the Financial Secretary has informed us, the taxation levied will affect roughly 12,000 people out of the 19,000 people who are being taxed. Here again, Sir, I suggest that the Labour Front deviates from its principle of trying to collect tax where it hurts least. 3.08 p.m.

Mr Speaker, Sir, yesterday, I said that the administration of the Income Tax Ordinance was on a pan-Malayan basis and this point has been brought up again by my friend the Member for Cairnhill (Mr Marshall). The reason for the amendment, if I gather it rightly, is that my hon. friends on the other side are very concerned for the lower income group. Now, who belongs to the lower income group, Sir? According to the Central Provident Fund Ordinance, a person drawing $200 should not be called upon to make any contribution to the Central Provident Fund because it was felt and it is still felt that a man drawing $200 belongs to the lower income group. Coming now to the illustration given by the mover of the amendment, the Member for Cairnhill has already replied and pointed out that a person who is called upon to make an extra payment of $10 will be one who is drawing, if a bachelor, $300 a month; if a married man at least more than $500 a month and if a married man with children, he would have to draw about $700 a month before he could be called upon to make this sacrifice - if one can call it - of an extra $10 a year which works out at about 80 cents a month. Is this such a great sacrifice to call upon people within those income groups to contribute for the good of the community? 3.10 p.m.

Mr Speaker, Sir, I support the amendment. I find that a flat rate of an increase of $15 a year is enforced on all annual incomes from $1,000 to $35,000. Is this fair? I should have expected a graduated scale of increase in income tax to have been produced. Surely, a person who receives an annual salary of $35,000 should pay a greater part of that than $15. Sir, the Ministers and their Assistant Ministers receive annual salaries ranging from $20,000 to $30,000. Was this flat rate of an increase of $15 produced so that they can escape paying more? Sir, is this the Labour Front's idea of Socialism? Surely, this method of increase in income tax cannot be said to be in accord with the Government's often proclaimed intention of placing the burden of taxation on the shoulders of those who would be able to pay. 3.13 p.m.

Mr Speaker, Sir, I am sorry to say that this Assembly has degraded from a very reputable one to that of a classroom and the schoolboys playing cheap politics.

Order. I must rule out the whole sentence.

I am sorry, Sir, I withdraw that. Some hon. Members of this House have been trying very hard to mislead the public. The proposed increased rate of tax does not affect the labouring class. From the figures shown here, for every dollar of the first $1,500, that means the chargeable income and the chargeable income means the assessable income which is your salary less any allowances that you are entitled to. On the first $500, a rate of tax of five per cent is charged. In other words, a bachelor who earns at least $300 a month pays $25 a year - about $2 a month. If this person is classified as one of the labouring class, I fail to understand it. 3.15 p.m.

Sir, speaking on the amendment, I was very happy to hear the full explanation given by the Member for Cairnhill (Mr Marshall). On pan-Malayan measures or measures with other countries when the Government is in the minority, it will be very wise to consult the Opposition to achieve harmony. Personally, I have the highest respect for the Hon. the Chief Minister of the Federation and his Party. I always express this. There is no intention whatsoever of doing any harm to the good relations existing with the Federation but had this position been explained to the Opposition, the matter would have been quite different. 3.16 p.m.

Mr Speaker, Sir, when I rise to my feet, the Minister for Health looks disgusted but I wish to remind him that I am not playing at party politics and I will speak as the man in the street is entitled to. Regarding the amendment proposed by the Member for Queenstown, I am afraid that I have to remind him that he tends to exaggerate the question of the $10. Sir, most of the time you will find that we argue and do not see eye to eye with the Government. We ask for more schools and more hospitals and I wonder whether they understand the plea for free education. Some time ago, a certain Party went to the extent of proposing free compulsory education. I would like to ask this question: Where are we going to get the money? Therefore, I said this morning - if I can recollect rightly - that it is right and proper for us, who call ourselves the leaders of the people, to speak the truth to them. We should work hard and save more towards the goal of a Socialist State or a Welfare State. But there is one point on which I cannot agree with the Member for Cairnhill and the Minister for Commerce and Industry. We impose this tax because we must compromise with the Federation of Malaya, as we have a pan-Malayan taxation structure. Sir, this hurts me very much. Although we have a pan-Malayan structure on income tax and on many other things, you will find that the picture is very gloomy and disappointing. I have pointed out this morning that the boom days of Singapore as a free port are gone. Therefore, I say that we should let the people know exactly the position we are in today. We want to impose income tax on a pan-Malayan basis but I would like to ask whether the elected Labour Front Coalition Government did try hard to stop the Federation of Malaya from imposing certain duties on our Singapore products. Why did they not have an approach to industry and commerce on a friendly pan-Malayan basis?

Because we are afraid of them.

Therefore, I think this is now the right time for us to realise the serious situation facing us. I think very soon, or even right now, we will have to face the fact that many factories and shops have to close down.

Quite so.

Therefore, I think that the proposal to impose only income tax based on a pan-Malayan structure is quite wrong. Everything should be done on a pan-Malayan basis - not only in regard to income tax but also with regard to economy, industry and commerce. 3.20 p.m.

May I speak to the amendment, Sir?

Certainly.

I am afraid that the Government cannot accept the amendment. The increase in the rate of tax on the lower slabs of chargeable income was agreed with the Federation of Malaya as part of the compromise about which the Hon. the Chief Minister spoke yesterday. It has been stressed in the course of this debate and past debates that a pan-Malayan approach to income tax is essential. This increase in the rate of tax on the lower slabs of chargeable income has been agreed and must stand. On the question of hardship, I refuse to believe that these increases can cause any hardship whatsoever. As has already been said in the course of this debate, no member of the working class is affected by income tax. I have a certain amount of information - of which I hoped to spare Members of the Assembly - about the rates of tax which were paid in other countries and perhaps hon. Members might like to hear them. I will start by quoting from a comparative table of the rates of tax and the rates of allowances in other countries besides Singapore. For example, in the matter of Personal Allowances, in Singapore, the individual taxpayer has a Personal Allowance of $3,000. In the United Kingdom, his Personal Allowance is $1,020. In Australia, he has no Personal Allowance. In India, he has no Personal Allowance. In Ceylon, it is $1,285. As far as Married Allowances are concerned, in Singapore, the Married Allowance is $5,000. In the United Kingdom, the Married Allowance is $1,800. In Australia, it is $891. In Ceylon, it is $2,250. In Singapore, allowances are paid on a descending scale on children up to nine in number. The total allowance in respect of children in Singapore is $3,150. In the United Kingdom, it is rather higher - $6,000. In Ceylon, it is $2,893. During the course of the debate last year, mention was made of a table of rates of tax applicable to other territories in the colonial empire. Forty territories were arranged in descending order of incidence of taxation. In this table, Singapore stands at the thirty-third place. The only territories below her are Sierra Leone, the Gold Coast, Nyasaland, Northern Rhodesia, Gibraltar and Hongkong. The difference between Singapore and the territories above her is very marked indeed. The lowest income group quoted in the table is �500, that is, $4,285. In Singapore, a married man with two children would pay nothing. In the Carribean he would pay as much as $80. Even in the Solomon Islands, he would pay $8. In short, the rate of tax in Singapore is probably amongst the lowest in the world. There is some other interesting information, Sir, which I should like to give to hon. Members. They will be interested to know that in Singapore, some $15 million a year is sent to China as family remittances. At least $16 million is sent to India. Lumping these two figures together, it works out at $25 a head of the population. Again, the population on the basis of 1954 figures, spent $18 million on entertainment tax or $15 a head of the total population. Contributions to totalisators and sweepstakes amounted to over $20 million a year or $16 a head of the population. Again, one in every four gainfully employed persons in Singapore has an account in the Post Office Savings Bank with an average holding of $375. Now, I take it, Sir, that - Mr A. R. Lazarous (Farrer Park) rose -

On a point of order?

On a point of information, Sir. The Hon. Member said that $15 million is sent to China and $16 million to India yearly but he has not said anything about how much money is sent to the United Kingdom. Can he please inform me on that point?

I regret, Sir, that I have no information about the amount of family remittances to the United Kingdom.

Very convenient!

They probably are considerable. Most Britons in Malaya make contributions to the cost of the upkeep of their parents. It is not the prerogative of the people of Singapore. I think, Sir, that the figures which I have quoted go a considerable way to destroy the argument that this incidence of taxation will cause hardship at any level. One point made by the Member for Serangoon (Mr Lim Choon Mong) was that only the lower income groups were affected by these increases in the rates of tax. Of course, that is not correct. The rates of tax affect everybody.

Can I ask for some information from the Hon. the Financial Secretary?

Certainly.

The Hon. the Financial Secretary said that our taxation rates are amongst the lowest in the world. What about Hongkong?

I think I said, Sir, that Hongkong was one of the territories which appeared below us in the colonial schedule.

Thank you.

Question, "That the words and figures proposed to be left out, be left out," put, and negatived.

The original Question is before the House. 3.29 p.m.

Sir, the revision of these rates, I take it, was the result of a compromise between the two Chief Ministers of Singapore and the Federation. We were told yesterday and today that Members of the Opposition should not embarrass the Government on such a minor affair.

Order, I was under the impression that the hon. Member was asking a question. If he is not, he is out of order. He has already spoken on the Main Question.

I am speaking on the main motion now, Sir.

The hon Member has already spoken on the main motion by introducing an amendment.

On a point of information, Sir. I wish to ask the Hon. the Financial Secretary the question put by many speakers, whether the Income Tax Ordinance will be changed to consider an increase in the allowance for personal relief?

It does not arise. I think the hon. Member can put down a question in the ordinary way. Main

Question put, and agreed to. Resolved, That this Assembly, pursuant to subsection (1) of section 106 of the Income Tax Ordinance (Chapter 166), resolves that the Second Schedule to the said Ordinance be varied by substituting therefor the following schedule with effect from the 1st of January, 1957:- SECOND SCHEDULE (Section 42) Chargeable Income Rate of Tax $ For every dollar of the first 1,500 5 per cent " " " " " next 500 6 per cent " " " " " " 1,000 7 per cent " " " " " " 2,000 8 per cent " " " " " " 2,000 10 per cent " " " " " " 3,000 12 per cent " " " " " " 5,000 15 per cent " " " " " " 20,000 20 per cent " " " " " " 10,000 25 per cent " " " " " " 5,000 30 per cent " " " " " " 5,000 35 per cent " " " exceeding 55,000 40 per cent

3.31 p.m.

Mr Speaker, Sir, I have His Excellency the Governor's authority to move, That this Assembly, pursuant to subsection (2) of section 11 of the Custom Ordinance (Cap. 160), resolves that the Customs (Duties) (No. 2) Order, 1956, published as Notification No. S 307 in the Gazette Supplement No. 80 of 7th November, 1956, as contained in Sessional Paper No. S.L. 33 of 1956, and the Customs (Duties) (No. 2) (Amendment) Order, 1956, published as Notification No. S 321 in the Gazette Supplement No. 84 of 15th November, 1956, as contained in Sessional Paper No. S.L. 36 of 1956, be confirmed. Sir, the original Gazette Notification S 307 had as its object considerable modifications to the tobacco tariff and amendments to the liquor tariff in so far as it refers to gin, rum and rectified spirit, and to the duty on petroleum. The main change in the tobacco tariff is, of course, in respect of cigarettes, from which 97 per cent of the tobacco tariff is derived. The duty on cigarettes has been raised half way to Federation levels and has resulted in the price of cigarettes being increased by five cents per packet of ten with corresponding increases in the price of larger packets. It was also intended to raise the duty on what is called Rhodesian-type tobacco which is used for the manufacture of the better quality of machine made local cigarettes from $2.50 a lb, to $4.50 a lb. It was considered desirable in the interest of the important tobacco revenue that there should not be too great a differential between the duty on this type of tobacco and the duty on imported cigarettes. In fixing the new rate of duty, the previous tax differential was maintained. It was thought that the fact that the duties on cigarettes generally had been raised would probably lead to a greater demand for the better type of locally manufactured cigarettes. The industry employs 52 persons. However, representations were made to the Government that the increase in price of these locally manufactured cigarettes would cause hardship to the labouring classes who are the main consumers of this type of cigarette. After consideration of these representations, it was decided to restore the duty to its previous level at $2.50 a lb. This action was taken on the understanding, however, that the manufacturers of the local cigarettes would maintain the price of the product at pre-Budget levels and that any increase in price would immediately result in an increase in duty. This restoration of duty was affected by Gazette Notification No. S 321 of which mention is made in the motion. Subsequently, representations were made by the local manufacturers of cigars to the effect that the increase in duty on imported leaf tobacco would necessitate an increase in price which would injuriously affect their sales and, consequently, a local industry. As a result of these representations, the Government has decided to restore the duty on imported leaf tobacco to pre-Budget levels and a Gazette Notification to this effect will shortly be published. The increase in duty on imported cigarettes has resulted in a slight increase in price. I do not think, however, that this increase will cause hardship. If it does in any particular case, the remedy lies in the hands of the consumer. He can reduce his consumption or switch to cheaper brands or he can give up smoking altogether which will probably be to his benefit, if not to that of the revenue. The increase in the rate of tax on liquor calls for no comment. As regards petrol, the taxpayer can perhaps regard himself as fortunate in so far as he lives in Singapore and not in the Federation. I have been asked to draw attention to a printing error which appeared in Sessional Paper No. S.L. 33 of 1956. "Northern Island" is quoted in the Paper instead of "Northern Ireland". That has been corrected in the Gazette. Sir, I beg to move.

I second the motion.

Question put, and agreed to. Resolved, That this Assembly, pursuant to subsection (2) of section 11 of the Customs Ordinance (Cap. 160), resolves that the Customs (Duties) (No. 2) Order, 1956, published as Notification No. S 307 in the Gazette Supplement No. 80 of 7th November, 1956, as contained in Sessional Paper No. S.L. 33 of 1956, and the Customs (Duties) (No. 2) (Amendment) Order, 1956, published as Notification No. S 321 in the Gazette Supplement No. 84 of 15th November, 1956, as contained in Sessional Paper No. S.L. 36 of 1956, be confirmed.

3.36 p.m.

Mr Speaker, Sir, I beg to move, That this Assembly resolves that the Special Reserve Fund of one hundred million dollars, created by Resolution of the Legislative Council on the 15th December, 1953, be liquidated with effect from the 1st of January, 1957. Sir, at a meeting on 15th December, 1953, the Legislative Council resolved firstly, "That a sum of $50 millions be appropriated from the General Revenue Balances of the Colony to form a Development Reserve Fund to meet expenditure which may arise in the future in connection with the development programme of the Colony, this Reserve Fund and the interest derived therefrom to be invested by the Crown Agents for the Colonies on behalf of the Government of the Colony in such securities as may from time to time be approved by the Secretary of State." And secondly, "That a Special Reserve Fund of $100 millions be created to meet extraordinary expenditure which may arise in the future and that for this purpose the amount standing to the credit of the Opium Revenue Replacement Reserve Fund at 31st December, 1953, shall be transferred to the said Special Reserve Fund, together with the difference between that amount and $100 millions to be appropriated from the General Reserve Balances of the Colony, this Reserve Fund and the interest derived therefrom to be invested by the Crown Agents for the Colonies on behalf of the Government of the Colony in such securities as may from time to time be approved by the Secretary of State." In introducing this motion, Sir, the Financial Secretary said: "that it was intended to create a Development Reserve Fund amounting to $50 million from the General Revenue Balance to ensure that the Development Plans can be financed on the capital side; and also a Special Reserve Fund of $100 million to provide a cushion to enable us to carry on our various services should there be a heavy drop in revenue." Later, he said that appropriations would not be made from either of these Funds except by resolutions of the Council. That, Sir, is the history of the Special Reserve Fund and of the Development Reserve Fund. Sir, when I moved the Second Reading of the Appropriation Bill, I drew attention to the fact that our Development commitments were such that it was going to be extremely difficult to find all the funds required to meet them and that it was necessary to make all funds surplus to basic reserve requirements available for Development. I also invited attention to the fact that our Reserve position was reasonably strong and considerably in excess of the accepted minimum requirements of a territory like Singapore. I therefore suggested that the Special Reserve Fund be liquidated, the sum of $70 million, that is, approximately four months revenue, should be retained as a liquid General Revenue Balance and that the balance of our Reserves should be transferred to the Development Reserve Fund. The liquid General Revenue Balance will be the sheet-anchor of the Colony's finances. It will act as a Revenue and Expenditure Equalisation Fund from which unforeseen shortfalls in revenue and unexpected increases in expenditure can be met until such time as the original position can be restored by increased taxation or by saving on expenditure. This motion aims at giving effect to this proposal and I hope that it will have the support of hon. Members. The position before and after the approval of this motion is shown in the Draft Estimates. On pages 6 and 7 of the Draft Estimates, hon. Members will see the Statement of Assets and Liabilities in the old form. On page 8 will be seen a Statement of Assets and Liabilities drawn up with Special Reserve Fund liquidated, Singapore Improvement Trust and other long-term loans charged to Expenditure - a matter which was touched on yesterday - the Development Fund increased by $58 million and the General Revenue Balance reduced to $70 million. On page 367 of the Draft Estimates will be seen the reconstituted Development Reserve Account. This account shows on one side the balance in the Development Reserve Fund, contributions from the Colonial Development and Welfare Funds, Contributions from Revenue to Development and Repayment of capital on existing Singapore Improvement Trust long-term loans. On the other side are shown the sums estimated to be required for General Development and loans to quasi-Government bodies. The advantage of this method of presentation is that it shows, on one side, the funds available for Development, and, on the other, all our known commitments in any particular year. The previous Development account showed only commitments in respect of General Development. Sir, I beg to move.

I second the motion. Question proposed. 3.36 p.m.

Mr Speaker, Sir, what I could gather from the Hon. the Financial Secretary is that the last Legislature wanted to put aside $150 million for a rainy day and that it should now be liquidated. May I ask why in the 18 months working of this new Government, we have come to such a sad position? Mr Hart rose -

In reply?

Yes, Sir. I fear that my friend the Member for Telok Ayer does not quite appreciate the position, Sir. The Legislative Council established, first of all, the Development Reserve Fund which was to be used for Development until it was exhausted and a Special Reserve Fund of $100 million which indeed was, as he said, for a rainy day. But if I may say so, Sir, the rainy day is now upon us and we have to make a certain portion of that Special Reserve Fund available for Development if Development is to continue. I think that we are perfectly safe in reducing our liquid reserve to $70 million. It is a very substantial sum and I think that it will be sufficient to protect us against any shower which may occur in the future. With regard to the Development Fund, we estimate that by the end of this year, the original $50 million will have been reduced to something of the order of $11.4 million.

Question put, and agreed to. Resolved, That this Assembly resolves that the Special Reserve Fund of one hundred million dollars, created by Resolution of the Legislative Council on the 15th December, 1953, be liquidated with effect from the 1st of January, 1957.

Mr Speaker, Sir, I move, That this Assembly do now adjourn. Mr J. M. Jumabhoy: I second it.

Question put, and agreed to. Resolved, That this Assembly do now adjourn. Adjourned accordingly at forty-four minutes past Three o'clock p.m.

Tuesday, 20th November, 1956

asked the Chief Secretary whether he will give details of the units and strength of (a) the military forces and (b) the Federation Police brought in to assist the Singapore Police Force during the recent riots.

The following units were made available to assist the Singapore Police Force during the recent riots: (a) Military Forces: 1 armoured car regiment 8 battalions of infantry 6 squadrons of the Royal Air Force operating as infantry (b) Federation Police: 4 Police Reserve or Field Force units with 4 more units in reserve in Johore. The strength of these units varied from 50 to 70 men each.

asked the Minister for Education whether he will supply details of the total cost of construction and equipping of each Government technical, secondary and primary school completed in the year 1956 to date, including figures showing cost of (a) purchase of land, (b) clearance of site, (c) construction of building, (d) provision of roads, playing grounds, drainage and fencing and (e) furniture and equipment; and whether he will give information reagarding the economies made in construction of these schools compared with the schools completed in 1955.

In 1955 the primary schools were completed; in 1956 twenty-one primary schools and two secondary technical schools. The details of their cost are shown in the following tables:- GOVERNMENT SCHOOLS (1956) DETAILED COSTS OF CONSTRUCTION AND EQUIPMENT (Cols 0821-0828 ) All but two of the primary schools built in 1955-6 were planned in 1953-4. They contain 16 classrooms in a standard three-storey block. 14 class-rooms were then used to accommodate the two streams of a 7-year primary course. With 40 pupils in each class and the schools used for morning and afternoon sessions the schools thus provided accommodation for 1,120 pupils. The other two classrooms were used for the teaching of music and vernacular languages. and, when the folding partition was drawn back, as a school hall. In 1955, the 7-year primary course was condensed to 6 years, and the schools accommodated 2� streams in 15 classrooms. This means that there are three streams and two streams in alternate classes, so that accommodation is provided for 1,200 pupils in hte two sessions. This economy has meant the sacrifice of accommodation previously used for language teaching, so that classes have had to be held in hte bicycle shed, the tiffin shed, and even in the open. Primary schools now being planned will be of 3 storeys and will have 18 classrooms with accommodation for 1,440 pupils. The size of each classroom has been reduced from 30' by 22' by 11' 4" to 27' by 20' by 10' 6". Accommodation for music will be provided in an annexe off the tiffin shed. By these and other economies it has been possible to accommodate 320 more pupils in each school without any increase in the cost of building, assuming that the cost of labour and materials remains constant. As each school will accommodate more pupils, fewer schools need be build, so that there is a further saving on the cost of sites and the salaries of principals, clerks and servants. any further increase in size, however, would have educational disadvantages to offset against the saving in cost. Two secondary technical schools were completed in 1956. They were originally designed as trade schols and have insufficient classrooms and laboratory accommodation. The school to be built in 1957 will accommodate more pupils and appreciably reduce the cost per pupil. No academic secondary school was completed in 1955-6. The need for the greatest possible economy in school building is kept continually in mide by a Working Party on whcih the Tresury, The P.W.D. and Ministry of Education are represented.

asked the Minister for Commerce and Industry whether he will supply details of the total catch of fish, prawns and crabs obtained in the two Government experimental prawn ponds for the period January - October 1956 and the sum realised therefrom; and whether it is anticipated that the catch for the year 1956 will exceed that for 1955.

The total catch was 6,638 katis made up as follows: Fish 946 Katis Crabs 100 Katis Prawns 5,592 Katis The sum realised therefrom was $7,802.

08. In 1955 the ponds were operated at the maximum level of production in order to determine basic data. It is not expected that the catch for that year will be exceeded in 1956 because experiments during the current year are being conducted on a basis of fewer operations with the object of reducing labour costs and obtaining a more economical yield.