47
NO DISTRIBUTION.
Decode
and Decypher
Sir A. Clark Kerr, (Shanghai),
24th August, 1938.
D
(wireless)
24th August, 1938.
R:
7 p.i
24th August, 1938.
No. 1276.
(R begins)
0:0:0:0:0
Your telegram Mo. 758.
It
Transit tax in question was instituted by Kuangtung Provincial Government some months ago and approved by Central Government.
was originally a temporary measure for a fixed period but has now
been extant for period of hostilities to assist suffering provincial revenues. Goods in direct transit by rail from Kowloon to Changsha etc., were at first exempted but as most goods in transit came to be sent by this direct route with loss of revenue to provisional
Government notification was issued on July 13th that transit tax
(60 per cent of customs duty) would be payable on such goods also
and collected at Shumchun which is Hongkong China frontier station.
Collection at this point was however found impossible for technical
reasons. Hence Chinese request to be permitted to open office and
collect tax at Kowloon. (R ends,,
Although we no longer claim any treaty right on which protests
can be based in connexion with internal taxation, this transit tax
is typical of provincial tariff which we have always disliked and
resisted where possible and there would therefore in normal circum- stances be no special reason why we should assist Chinese to collect it.
But conditions are not normal. Moreover the tax has the approval of Central Government as a temporary war measure and Consul General Canton has already obtained exemption for certain classes of goods (e.g. products of British factories in occupied areas, for instance which have paid consolidated tax to Central Government and goods consigned to His Majesty's Ships for their own use). Compliance with request might be appreciated as a small measure of assistance to China in fulfilment of our undertakings.
But any compliance should be subject to following conditions:
(a) tax to be limited to duration of hostilities;
(b) Hongkong Government may withdraw their consent at any time; (c) classes of goods already exempt in Canton to be exempt also at Hongkong.
Addressed to Foreign Office; repeated Saving to Canton and
Hongkong.