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safeguards for British subjects are secured, articles 51 and 53 of the Harbin regulations will lose the objectionable character which they would otherwise possess.
In instructing me in your despatch under acknowledgment to open negotiations with my Russian colleague regarding the payment of municipal taxes by British subjects in Harbin, you desire me to pay particular attention to certain matters which have seemed to be of special importance. I now beg leave to submit for your consideration some remarks on various points, taking for the sake of lucidity each in
turn:-
it
(1.) The desirability of obtaining reasonable guarantees as to the method of
expenditure of municipal taxes levied from British subjects.
It is unnecessary to dilate upon the reasons obvious enough which have prompted this proposal: the important thing is to discover how far it may be possible to give effect to it, and, in endeavouring to form an opinion thereon, special consideration must, it would seem, be given to the peculiar nature of local conditions. The municipal organisation in Harbin is, as stated in my report on the railway settlement of Harbin of the 30th June last, still in an embryonical and experimental stage, and it is not even now possible, owing in part to the fact that a complete statement of accounts has not yet been published, to come to any definite conclusion in regard to many of the results of the work of the local administration during 1909, the first year in which it resumed full responsibility. One thing, however, is certain., namely, that though it cannot be asserted that municipal funds have been disbursed to the best advantage, considerable improvements in the conditions of the town have been effected by the municipal administration. Instances in point are extensive though inadequate, repairs to the roads, improved street lighting, and the construction of a good bazaar or market in the Pristan to replace the ramshackle booths which formerly did duty for the purpose.
As regards then the particular form of guarantee now under discussion, may at least be said that on the evidence available it does not seem possible to call in question the good intentions of the local municipal administration in regard to town betterments and improvements. On the other hand, bearing in mind the peculiarity of Russian ideas and methods, I think it unlikely that, at any rate for some considerable time to come, the best use will be made of municipal funds, and it therefore follows per se that British subjects, if they pay taxes, must not expect to derive the same good results therefrom that they might reasonably await in a British municipality. The utmost that can be done for them is to endeavour to obtain the best terms procurable under the peculiar conditions which prevail. Taking everything into account, and especially the possibility that since the municipal organisation in Harbin is still in an embryonical and experimental stage, you may think it advisable that any arrangement regarding the payment of taxes by British subjects should, in the first instance, he of a provisional character and open to amendment should circumstances require, I would submit for your consideration the proposal that the form of guarantee should be confined to a general undertaking to the effect that every effort will be made to employ the municipal revenue to the best advantage, The American Government in agreeing in a somewhat informal way to the provisional payment of taxes by American subjects in Harbin specified, as reported in my despatch No. 18 of the 22nd July last, the particular taxes, viz., police, road, lighting, and sanitation, which they considered might properly be levied. As explained in my report on the railway settlement and municipal administration of Harbin of the 30th June last, there is no special police tax and certain sanitary measures, such as those necessary to prevent the spread of epidemics and epizootics, are undertaken by the railway company, which receives for this purpose a contribution from the municipal administration of 2 per cent. upon certain items of revenue (see pp. 13, 14, and 15 of the said report). Again, according to the preliminary municipal reports for the year 1909, from which the figures and many of the particulars furnished in my report above mentioned were taken, the percentage of the estimated municipal revenue, including the contribution held to be due to the railway company for the upkeep of the police, expended on the requirements of the municipal 'administration and its staff, the police force, the fire brigade, town improvements, new works, public education, and medical, sanitary, and veterinary measures was respectively 24, 5'6, 9, 3, 54, 6, and 7 per cent., a total of 60 per cent., or in round figures 86 per cent. of the total revenue actually collected at the time of the issue of these reports. Of the expenditure under the above heads only that occurred on public education and on medical, sanitary, and veterinary measures seems likely to be open to question as
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being disproportionate to the benefit which would accrue to British subjects paying municipal taxes irrespective of the purpose to which they are put. The expenditure on public education and medical, sanitary, and veterinary measures was respectively 30,000 rupees and 35,000 rupees. Of the first nearly 30,000 rupees was expended on the upkeep of town schools, and of the second 20,000 rupees, with an expected addition of 10,000 rupees, was devoted to the provision of medical treatment for the poor. British subjects are not in general likely to want to take advantage of the free education given in the town schools, and the number of British subjects requiring free medical treatment will in all probability be small. On the other hand, the schools would be available for the children of British subjects should they wish to make use of them, and the number of British subjects, e.g., natives of India, desiring free medical treatment night by comparison be conceivably not very interior in ratio to the whole strength of the British portion of the town population. Further particulars in regard to the foregoing points may be obtainable during the next few weeks; but, subject to any fresh considerations to which such information may give rise, I would suggest for your consideration that it may not be necessary to specify the purposes to which taxes paid by British subjects shall be put, and that a general declaration of the nature already described may be held to be suflicient to afford a reasonable guarantee that the British contribution to the municipal revenue will, in so far as the peculiar circumstances permit, be devoted to the proper requirements of the municipality.
(2.) The character of the municipal taxes at present levied in Harbin, and the question of the willingness of British subjects to contribute towards the municipal revenue.
It is, I think, unlikely that much, if any, objection will be taken by British subjects to the existing land, building, and lodging taxes and licence fees, provided they are assured that their agreement to contribute will not expose them to unjust and vexatious treatment at the hands of the Russian authorities and that they will not lose their extraterritorial rights. The taxes, however, imposed on factories and commercial undertakings, notwithstanding that a case is knowu where a prominent British firm, without heed to the principle at stake, was willing to pay what it considered a reason- able sum as tax on its business undertakings, will, I have no doubt, meet with opposi- tion. I mentioned the matter of these taxes to my Russian colleague in preliminary and informal conversation, and told him that I thought that they would not be acceptable to British subjects, giving as one reason for this opinion the method of assessment. M. Poppé did not seem insensible to the objectionable features of these taxes, and told me that they had not been favourably regarded by the Austrian consul in Tien-tsin, who also acts as consul for Austria-Hungary at Harbin. I intimated to my colleague that a business tax was not objectionable in principle, and made mention of the annual tax of this kind amounting to 50 dollars levied on all firms established in the British concession at Canton, and of the band rent paid at Tien-tsin by vessels putting their cargo on the bund (see my report of 30th June last, pp. 22 and 23), M. Poppé promised to enquire into the matter and to endeavour to ascertain whether some other method of taxation in substitution of these taxes could not be devised. is not without interest to this question that a proposal has been made to introduce at Harbin a popoodni sbor," or transport tax, in order to provide sufficient funds for maintaining the long length of roadway in good order and repair. This, I understand, is a form of levy well known in Russia, and is collected on all goods entering and leaving the town, the argument being that they are largely responsible for the wear and tear of the roads, since the whole population is in all probability directly or indirectly interested in the various kinds of merchandise entering and leaving the town, this tax would not appear to be inequitable, and there would therefore seem to be a possibility that a substitute for the present imposts upon commercial undertakings and factories might, if there is on our part no objection thereto, be found in a levy of this or similar kind.
(3.) British representation in the municipal administration.
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It is not probable that the numerical strength of the British vote in Harbin will, in the near future at least, be sufficient to ensure, independent of the wishes of their fellow Russian citizens, the presence of a British representative in the assembly of delegates or on the municipal council. It is possible, however, that what cannot be obtained by weight of numbers may be securell through the good-will of the Russian
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