CGFFM: omd
SAVINGRAM
To the Secretary of State for the Colonies.
From the Governor, Hong Kong.
Date
No.....
46
-2-
It will be seen that the actual receipts for the first half year are well above the proportionate estimates with the exception of the slight short fall on Estate Duty and the substantially lower collections of Earnings and Profits Tax. It is customary for the bulk of Earnings and Profits Tax to be collected in the second half of the year, and it is still hoped that the estimate for the year will be achieved.. The substantial increase in revenue from Tobacco Duties is the result of the restriction of the activities of the tobacco factories in Shanghai and the less effective control by the Chinese Maritime Customs of smuggled imports into China. Now, however, that the control of the frontier has passed into the hands of the Communist forces, it seems im- probable that this traffic will continue.
6.
The excess of revenue over expenditure is being maintained only by energetic measures to reduce and defer normal expenditure, assisted by the continued buoyancy of revenue. But in present circumstances, a fall in revenue receipts appears to be inevitable. For example the "liberation" of Canton has already resulted in a sharp reduction in Railway revenue. The resumption of through traffic is likely to be delayed until recognition has been accorded to the new Government. Even then it will proba be on a basis which will involve Government in a conti reduction of revenue, and an increase in operating costs. The cost of living still shows an upward tendency, and increased rehabilitation allowances have automatically become payable.
7.
Defence requirements show no sign of diminishing and they continue to throw a heavy strain on the finances of the Colony. Moreover, the proposal that all Public Works expenditure on military works should rest where it lies will greatly increase supplementary expenditure during the remainder of the financial year. Such expenditure on roads alone is expected to amount to $3,500,000.
27.