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any sources of revenue included in the total revenue when the percentage for the Contribution was fixed remain subject to assessment, despite their expansion, so long as the percentage remains unaltered. The Council would point out that the principle, which you seek to establish, of differentiating between old and new ferritories cuts across the accepted principles of assessment and night, if accepted, open the door to fresh differences of opinion with the Colonies.
8. As regards the claim for an allowance in respect of all capital expenditure on waterworks met from revenue, I am to state that the Army Council do not find themselves able to agree with the advice which has been given to your Department, that the assessments made on the gross revenue of the waterworks in past years were contrary to the terms of Section 3 of the Defence Contribution Ordinance No. 1 of 1901, and that, by law, annual deductions of 4 of the capital expenditure met from revenue should be made for 50 years from the gross receipts.
I am to observe that the Council consider that this view is unsupported by the historical circumstances associated with the Section, and ignores the correspondence between the Colonial Office and the Hong Kong Governments when the Section was introduced into the Ordinance,
A section on the lines of Section 3 of the Hong Kong Defence Contribution Ordinance No. 1 of 1901 is common to all the Military Contribution Ordinances of the Eastern Colonies. The first portion of the Section follows the lines of the Sections drafted for the Ceylon and Mauritius Ordinances in 1897 and 1898, when railway receipts were first treated on the basis of net receipts in those Colonies. It was introduced into the straits Settlements Military Contribution Ordinance in 1899, when it was desired to treat a public telephone system on the basis of net receipts, and the Colonial Office (Colonial Office letter No. 16849/99 of 5th July, 1899Lto the
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