considered separately.
4. No provision is made for any contribution
towards the cost of Military Administration.
This
will have to be considered separately. It is hoped
that the War Office will agree to bear the cost of
the Military Administration for the month of April,
1946 but this matter is still the subject of
correspondence.
5. It is appreciated that there may be little scope for
reduction in expenditure in view of the urgent need for
rehabilitation. It will accordingly be necessary to
consider to what extent (a) revenue can be increased;
(b) expenditure can be financed by means of loans.
6. Increase in revenue. It is necessary that the
revenue should be increased to the greatest possible
extent not only in order to achieve financial solvency
but also to combat inflation:
(a) Income Tax. It should be the firm policy of
the Government to introduce a full income tax system
as soon as staff is available following the general
development which has taken place in other Colonias
in recent years. Pending that introduction, interim
measures on the lines of the combined system of war
taxes, i.e., property tax, salaries tax, profits tax,
and loan and mortgage interest tax, should be adopted
without delay. You will no doubt consider whether any
variations in rates or otherwise should be made from
the rates and allowances under those war taxes.
(b) Consideration should also be given to the possibility
of increasing the duties on liquor and on tobacco, both
of which duties have proved to be great sources of
revenue in the U.K. Additional duties on luxury goods
should be considered and also every other possible source
of revenue.
(c) Subject to local considerations, the general scale
of taxation should be raised to compare with that in