Mr. Boss.
Mr. Harding.
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Mr. Galsworthy. Mr. Mayle.
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No. 5 is a very comprehensive despatch and I agree with the commendations of Mr. Follows referred to in paragraph 36.
On the face of the Estimates the position is satisfactory. The estimated revenue is equal to the estimated expenditure. The estimates do not however include any "special expenditure" to be met from the proposed loan nor do they include certain residual expenditure arising out of the war such as payments to members of the volunteer forces,return passages to Hong Kong of ex-interned personnel and certain relief payments. Local opinion is that this expenditure should be met by His Majesty's Government. This will be considered when Hong Kong has drawn up an appreciation of her probable financial position over the next five years for which we are asking on 54126/6/47. Thus these estimates cover only a certain range of expenditure which is described as "recurrent", and in examining these estimates it is necessary to bear in mind this limitation.
Revenue
The estimated revenue is double that of 1946-47 as there is a full year's provision instead of only 11 months; and there was an underestimate in 1946-47, and there has been certain increased rates of taxes following on the recommendations of a Taxation Committee appointed by the Governor. The Chief addition is due to the introduction of Income Tax which is estimated to produce $16 millions and without which the budget would not have been balanced. In view however of the fact that the Estimates only include "recurrent" expenditure, the 0.A.G. should be asked to consider the need for raising additional revenue as obviously the Colony will have to balance its budget as soon as possible on a somewhat more realistic basis that it is "balanced" at present.
Expenditure
The Governor in his despatch has explained the more important items of expenditure and apart from the remarks below there is little which can be added thereto. (a) Paragraph 14 Head 20 Item 24.
This
Cost of living allowances etc., $24,000,000. includes $5,000,000 to cover any increases in salaries which may be recommended by the Salaries Commission. In approving the Estimates, our approval of this particular amount should be withheld for the time being. The Governor has however already asked for approval for increasing the rates of the existing cost of living allowances. The request has been referred back to the Governor (53832/47) but if the increase is eventually approved it is estimated to absorb $3,744,000, the the $5reda, aver
(b) Paragraph 15. Head 20 Item 26.
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$1,500,000 is included as an initial grant to the municipality if one is establisned; this item can be withheld for the time being.
and our approval for
(c) Paragraph 16
refers to the possible engagement of
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