2.6
A.6
Q.7
A.7
Q.8
A.8
CONFIDENTIAL
If The Queen now pays tax on Her Privy Purse Income (to the extent that it is not used to defray expenditure in connection with Her official duties), why does the Governor still enjoy
exemption from tax on his official emoluments which are mainly for his private use?
It is not meaningful to compare the two because the tax position of the Governor is different from that of The Queen
(a) While The Queen was not liable to pay any
income, capital gains or inheritance tax in the past, the Governor has been subject to all forms of taxation except excise duty and salaries tax on his offical emoluments as Governor of Hong Kong.
(b) The fact that the Governor's salary will be tax
free is clearly set out in his letter of appointment. There is no such contractual condition in the case of The Queen.
How does the Governor's position compare with Governors elsewhere?
Similar exemption found in other Commonwealth countries and self-supporting dependent territories of the Commonwealth. For instance, Australia exempts the official salary of the
Governor-General. The Governor of Gibraltar is also exempt from tax, as are other Governors paid by dependent territory administrations.
Surely decision avoids philosophical question of whether, in the light of the action by HM The Queen, the Governor should pay tax and not hide behind his contract?
No wish to double-guess what the independent Panel decided. It made the point that there is a contract setting out the terms and conditions of the Governor's appointment, and that the Governor accepted his appointment on the terms offered to him. The Panel concluded that the legal obligations contained in the contract must stand. This was a basic principle underlying all contractual agreements. The Hong Kong
Administration has made clear that it shares that
view.
CONFIDENTIAL
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