101
that the income arising from investments purchased with the proceeds of land sales should have been exempt from assessment in the past because the proceeds of the land sales are themselves so exempt, and that exemption should be allowed in the future. I am to state that the Council are unable to accept this view, They are prepared to agree to exemption in cases where such income is definitely used solely for the purpose of increasing the investments, but where the income is included in general revenue they consider that there can be no question but that it has been rightly subjected to
assessment.
13. The penultimate paragraph of your letter concludes with an appeal to the Army Council to consider the claims in the spirit of certain remarks made by Lord Haliburton in a memorandum dated 8th June, 1899. On this point I am to observe that that memorandum was directed in the main to the treatment on the basis of net receipts of new industrial undertakings, viz., those established by the Colonies after the fixation of the percentage of the assessable revenue to be paid as military contribution. But the Council trust that, although they have not been able to accept the Colonial office views on all the claims put forward for exeuption or special treatment, it will not be felt that they have failed to consider the whole matter in the accommodating spirit which
Lord Haliburton advised. It has been found possible by making certain concessions to accept the majority of the claims, but to accept the remainder would, in the opinion of the Council, seriously impair the general principles relating to military contributions as laid down by ILord Haliburton's Committees.
at
14.
The military contribution of the Colony falls far short of the cost of its garrison, and the Secretary of state for the Colonies will readily understand the difficulty which the Army Council would feel, particularly at the present moment in recommending to the Treasury any substantial departure, the cost of the British taxpayer, from the long established principles relating to the contribution. In this connexion the attention of the Council has been drawn to the recent report (Cmd. 3932 of 1931) of a Commission appointed by the Secretary of State for the Colonies on the Hong Kong currency; referring to the large number of immigrants, the Commission remark
(paragraph 361
9
91