MC
Tel. No. Whitehall 1234
NIONAL
Your Reference
Treasury Reference L. F..16/10/02
Dear Palmer,
copies sent to Accts.
73
TREASURY CHAMBERS,
GREAT GEORGE STREET,
LONDON, S.W.1
24th February, 1948.
JD. 22,
(34) on '47/ike
We have just had sight of your Despatch No. 40 of the 7th February, to the Governor of Hong Kong about that colony's Income Tax Ordinance. We feel some concern about the phrasing of the Despatch and about the delay of 5 months in getting it
(26) m'47 file away. Perhaps I may refer to our letter of 9th September, to
fedit which you have not replied.
points:
In that letter we made three
(a) we felt that the 10% rate should be regarded as only temporary and increased as soon as possible;
(b) we were far from sure that there was any justification for levying only half the standard rate of property tax and we asked whether you were satisfied that the rent restriction legislation was in fact fulfilling its purpose;
(c) we asked for clarification of the position of these Hong Kong residents who, although living in the colony, derived their incomes from sources outside. We asked to be furnished with the observations of the Board of Inland Revenue on this point.
Your Despatch, I feel, scarcely covers these points adequately. Subsequent events however, have tended to confirm our doubts. All our information shows that the colony is in the midst of an unprecedented boom. It certainly seems anomalous that although although the colony is, so prosperous that the payment of war damage compensation is unnecessary, the Government itself it unable to do more to increase revenue. In a boom period of this sort, one would have expected the local government to budget for considerable surpluses with a view to building up its reserves and to financing from taxation a proportion of its special expenditure.
H. Palmer, Esq.,
Colonial Office.
/We