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1.
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removing those objectionable features in the Ordinance
and at the same time securing higher royalties and other
advantages to Government. The arrangement incorporated
in the present Bill is as follows: -
The Company provides Government free of
charge with a telephone service for Government purposes
up to 500 lines and aranges for the necessary branch
exchange in a place suficiently protected from possible
alr raid damage. This exchange has been constructed
in the basement of the Hong Kong and Shanghai Bank
Building.
The modernisation of the Government system,
which is obsolescent, would involve considerable
expenditure and on technical grounds it is desirable
to amalgamate the Government with the Company's system.
The provision of this exchange represents a capital
Saving to Government of roughly one-quarter of a million
dollars. Also a discount of 25 per cent will be allowed
Government on the standard rate of subscription in respect
of any telephones or connections in excess of these 500
lines. Arrangements will be made later for the Company
to take over other Government services when it is possible
to obtain the necessary equipment, and until this matter
has been further discussed from the technical angle it
is difficult to estimate the ultimate saving to Government
in respect of recurrent expenditure and personal emoluments, but an appreciable saving is anticipated
in respect of both.
Also an additional royalty of one half of the
surplus profits over and above the amount required to
pay a 12 per cent dividend on the paid up capital shall
be payable to Government. In order to avoid double
taxation the Company is permitted to deduct any amount