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5. So far revenue which was estimated very conservatively has been coming in extremely well and it is expected to exceed the original estimate by $70 million half of which excess is derived from duties, tobacco again being responsible for a large share. Expenditure has been closely controlled and Heads of Departments were urged to exercise every possible economy. The result has been that even after charging off $ 50 million of loan advances to Expenditure, a surplus of some 23 millions is expected on the current years working. The revenue estimate for 51/52 allows for a drop of $ 27 million as compared with the revised estimate for the current year and is considered reasonable on the information now available, as it seems clear that there will be a considerable time lag before the full effects of the American embargo are felt, even if efforts to secure some degree of relaxation fail. Moreover, the revenue total includes a final payment of $6 million due on a large estate and also 64 million in respect of the business registration tax which was approved in your telegram No.482.
of 1950.
6.
Serious difficulties were encountered both over plans for the practical administration of the proposed tax and the drafting of the necessary legislation, particularly in regard to the question of premisses as the tax had to apply equally to ordinary business premises and to a substantial business conducted from a hotel room. It was only recently that these difficulties were fully resolved and it is proposed to introduce the necessary legislation early in the financial year. For reasons explained in paragraph 3 of my telegram No.335 of 1950, the first essential is to establish the necessary machinery for registration. To ensure that no unnecessary hardship is inflicted on small business, it is proposed, in the first instance, to fix the annual fee at $200 instead of $300 as originally contemplated. This will reduce the yield to 4 million which is the figure included in the revenue total, but once we have practical experience of the tax the effect of any increase on small business can be better judged.
7。 Your have already under consideration my confidential despatch No.8 which contains proposals for the establishment of an essential commodities equalization fund of $ 30 million and a development fund which should stand at $ 50 million at the beginning of the new financial year. It is important that I should receive your decision as early as possible, as it was stated some months ago in reply to a question that an announcement on this subject would be included in the budget speech.
8. Some reference to consolidation will also be expected and a bald statement that proposals are under consideration, will not be well received by the service. trust therefore, that it may be possible to say some thing more definite even though you/may not at this stage find it possible to reach final decisions on all the details of the
scheme.
I
90 In view of the fact that, in addition to budgeting for a modest surplus we propose to set up a development fund and have charged off $50 million loan advances to expenditure, you will, I ah sure, appreciate that it would be politically quite impossible to suggest further taxation at the moment, though a warning will be given that the American embargo and other control measures may have a very
/serious