+
9
though it acluered
Sam
8
10 malhin
Head 32. nr Expenditure.
Provision of some $12,000,000
is made under this Head. The only point for consideration here is the position of the construction of vessels for the Admiralty for which a sum of $4,700,000 is provided. The Treasury have shown some reluctance to accept Hong Kong's withdrawal of its offer to pay for 4 ships, but provision is only made this year in the Estimates for the 2 originally promised last year. It is clear that at the moment the Colony is not in a position to meet the expenditure on 4 ships, but I am taking the matter up separately with the Treasury on the appropriate file.
The Governor has asked for approval of the Estimates by telegraph, and they have been badly held up by difficulties of communication. In the circumstances
I suggest that approval might be given to the Estimates as they stand by telegram, and the file then recirculated for consideration with the S. of S.'s Advisers and the other Depts. concerned of the lines of a confirming despatch.
Wh?
24.5.41.
These Estimates have entailed a good deal
of study, and the approval which the Governor has been waiting for has been delayed, but day to day pressure of urgent work has made it difficult.
The past financial year in Hong Kong
covered a 15 month period for the purpose of inaugurating a financial year in future of 1st April to 31st March in place of the old financial year of 1st January to 31st December. The comparison of figures with the year 1940-41 has to be subjected to correction on that account.
In order to understand how the war situation has affected Hong Kong finance it is sufficient to note that the normal scale of revenue and expenditure before the war was round about $30,000,000. The present Estimates amount to $62,000,000 Expenditure and $57,000,000 Revenue.
Mr. Monson has fully analysed the principal features of the new Budget, and on those details I have nothing further to comment on myself. For the 15 months year 1940-41 Ordinary Revenue has been sufficient to meet Ordinary Expenditure, but war expenditure was to have been the subject of a separate war budget. This plan was, however, dropped and instead a new head of expenditure entitled "War Expenditure was adopted and was intended to be met by the yield of the war income tax (about $10,000,000 estimated). The straight method of income tax was in turn dropped following upon a close examination by a local Commission of its feasibility, and in its place a war taxation measure was adopted which has proved insufficient to meet the unexpectedly large cost of local defence and war expenses ($15,000,000 as against $2,000,000 estimated). The excess of over $5,000,000 war expenses has had to be met by increasing during the course of the year various items of Ordinary Revenue.
An