71
which the contribution is to be paid. * In form, this system would supersede that introduced in 1894/95 at the instance of the Colonies themselves, but
that would not necessarily be a final objection to it if it were shown that it would yield the required amount s
·
3.
The main grounds on which the new proposal is put forward are three. In the first place, the Colony argues that if the new proposal were carried out it would then be possible to budget exactly for the military contribution, since the amount of contribution due in any particular year would be known before the Estimates of that year were prepared. It might be added that this knowledge would also be of some assistance to the War office, since, under the proposed system, the War Office would know before each year's Estimates were prepared, what the exact dollar contribution from Hong Kong would be. things are, both the Colony and the War office have to work on Estimates, but the outcome of the revenue is always different and accounting adjustments have to be made every year . The new proposal would simplify accounting and, if it were adopted, the only element of uncertainty then affecting the War Office would be the rates of exchange at which the monthly payments of the contribution would be adjusted.
As
4.
The second ground advanced by the Colony in favour of the new proposal is their desire to find a basis of assessment which would avoid the controversies attendant on definitions of the revenue assessable to contribution. It is true that there have been such controversies, particularly before the war (in some cases these were due to flaws in the colony's method of accounting), but the War Office is not aware of any recently affecting Hong Kong, apart from the present correspondence in which the Colony has indicated various changes that it would like to see made if the present system is to continue. These are dealt with below in paragraphs loff.
5.
The Colony's third objection to the present system (mentioned but not stressed by the Governor) is that under it every item of new taxation for a new service has to bear a surcharge of 25 to meet the military contribution payable on the increase of revenue. But this is not illogical under the present system, nor is it unreasonable if an increase of revenue may be assumed to indicate an increase of the Colony's capacity to pay military contribution. The view propounded in War office letter to the Colonial Office For 10/1192 (72) dat ed 24th May, 1910, with reference to the Straits Settlements, was that new classes of revenue should be assessed for contribution and that this was consistent "with the fundamental basis of calculation of this contribution as a fixed percentage of the total gross revenue. For this purpose, it is clearly immaterial whether an increase of revenue is produced by the development of existing or the
creation/
Actually the Colony's first despatch of 28th July, 1928, proposed 12% of rateable value: the second despatch suggested an additional "if by that means a permanent settlement could be obtained", The Colonial Office's letter of oct 12th 1928 formally offered 12%.