8.
-3--
When presented to Legislative Council, the estimates of revenue and expenditure for 1951/52 were as follows :-
Revenue.
Expenditure.
•
$247,280,850
$233,465,137
$13,815,713
52
Surplus....
million
The effect of the changes made in Select Committee was to reduce this surplus slightly to a figure of $13,130,800 and in his budget speech the Financial Secretary made it clear that there would almost certainly be a further considerable reduction later in the year because the figure of $8 included in respect of the contribution which this Government is to make for the year 1951/52 in connection with the present emergency was only a tentative one. It was explained that the final figure was a matter for negotiation and that it was bound up on the one hand with local expenditure on defence and security generally, and on the other with expenditure incurred by His Majesty's Government in Hong Kong. While it was felt that the heavy expenditure which the Colony is incurring in respect of civil measures for defence, for which it has been necessary to re-vote $7,700,000 for the current year, should be taken into consideration, it was also the case that the additional expenditure incurred by the Service Departments in Hong Kong was still very high, and that the defence commitments of His Majesty's Government had increased all over the world. It might therefore be found that a strong case could he made out for a contribution totalling in cash or in services about the same figure as for 1950/51, in which event a supplementary vote would become necessary.
9.
In framing the estimate of revenue for 1951/52,
The it was necessary to weigh a number of probabilities. American embargo is likely to have a very serious effect on the trade of the Colony. There should, however, be a time lag before the full effects are felt, and the seriousness of these will depend on the degree of success which is attained in the endeavours which are still being made to secure some modification of these restrictions. There are other factors which may affect the position, but after a careful review of the probabilities it was felt that a total revenue of $247 million might be reasonably expected. This is $40 million below the final revenue figure which is expected in respect of 1950/51, but it really makes allowance for a drop in revenue of some $53 million, for the 1951/52 estimates include certain self-balancing items, a substantial final payment of estate duty and revenue estimated at $4 million from the proposed business registration tax which did not figure in the 1950/51 total.
10.
It will be recollected that in connection with the 1950/51 budget it was proposed that the standard rate of tax under the Inland Reve me Ordinance should be raised to 15 per cent. This however gave rise to determined and wide-spread opposition, and so authority was sought for the introduction of certain compromise proposals which involved an increase in the standard rate of tax to 121⁄2 per cent only, and the introduction of an annual business registration fee of $300 for all business premises, coupled