23
vet reached you.
The line I took was that such
offers should be considered on their merits in the
light of the financial and constitutional position of
the individual Colonies concerned and I suggested that
in the case of Hong Kong it would be unwise to
discourage such a contribution.
I am therefore in agreement with the terms
of the draft telegram opposite, and as the Governor
asks for a reply by tomorrow I am sending these papers
forward direct. In normal times the proposal to
constitute a separate Defence Budget to be financed
from a special item of revenue (in this case, income
tax) earmarked for the purpose would, I believe, be
contrary to accepted accounting procedure;
earmarking revenue in this way has, I think, generally
been frowned upon in the past. But under war
conditions I would not suggest that we should raise
any objection, more particularly as there is less
likely to be local objection to the introduction of
income tax if it is separately provided for in this
way. As Sir John Campbell points out, income tax
once imposed has a wav of becoming a permanent
feature of taxation. Having lively recollections of
the controversies aroused by the introduction of
income tax in another Colony, I should certainly let
Hong Kong insert the thin end of the wedge in their
own way.
Jagreed
Itm.
10.10.29.
1
agree.
(0, 10,
39
M.M