moth
Ory. on 53652/48
Code
FROM HONG KONG (31r A. Grantham)
D. 30th March, 1948, R. 30th ##
#f
14.40 hrs,
No. 350
54
9
Your telegram No. 357 (8)
Estimates,
This telegram was only reccived just before first reading of Appropriation Bill was due to be taken. It was of course realised that it would have been greatly preferable for expenditure to have been covired by normal revenue and for arrears of earning and profile tax to have been utilised to build up reservoa. This was not, unfortunately, possible on the present occasion, but it must be borne in mind that expenditure for the coming year is swollen abnormally by certain non- recurrent items such as 85,000,000 in respect of Kai-Tak (Hong Kong) compensatio
(1)on 54281/140
2
I am much concerned by the scale of expenditure generally and it is my intention to review all departmental expenditure very carefully when Efficiency Expert (see my telegram No. 230) arrivos. Over 60% of our personal emoluments ball is in respect of menial staff and it seems however, that this is a relic of the days when human labour in the East was cheap and there is no particular incentive to economise in staff. Now that salary scales for the public service have been improved I propose in conjunction with the Efficiency Expert to examine establishment carefully with a view to cutting out all staff which is not strictly necessary, This was particularly stressed by the Financial Secretary in his Budget speech.
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As regards the desirability of increasing the standard rate of earnings and profits tas, I have already in paragraph 3 (7 of my confidential despatch No. 57 of 18th March explained that I should be reluctant to take such a step at the present juncture, So far evusions appear to have been on a smaller scale than was expected, but if the rate is increased there is little doubt that evasions will become widespread. The greatest difficulty is being experienced in checking assessments, even under present conditione, and owing to lack of progress in the recruitment of Assessors a little less than half the estimated tax to be assessed for the year has so far been collected, mostly from large taxpayers.
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Even to collect this amount it has been necessary to resort to provisional assessment in many cases. to efforts being made to bring assessments up to date, present
If, in addition very inadequate staff have to combat large scale evasion, position will become hopeless, and I would strongly recommend that nothing in the nature of increase in rate should be attempted until establishment of Aecessors is brought up to strength. As I explained in last paragraph of my despatch No. 57, (7)
possibility of providing in Ordinance for taxation of income such as remittances to refugees received in Colony has/heer overlooked, but such a step is impossible while Department is 28 seriously under abaffed as 14 the case at pserenû,
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