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PUBLIC RECORD OFFICE
Reference :-
TPIPE C.O. 882
286
licensing laws. I therefore venture to strongly deprecate the imposition of any Income Tax during the remainder of the current financial year; for, not only would the passage of the measure be most unpopular, but I am of opinion that the result in revenue would be inadequate.
5. To revert now to the question of other extra taxation, the provisions of the two draft Ordinances submitted by Sir Graham Bower to the Council of Government, which formed enclosures to his despatch No. 236 of the 1st of July last, were esti- mated to produce Rs. 500,000 in all. I do not think that that amount would be realised if they had become law at the beginning of the current financial year; they were not acceptable to the Council as to the commercial portion of the community, and they undoubtedly had the disadvantage of a general disturbance of the tariff. It would be better, in my opinion, if such a course is imperative, to increase the general surcharge on the tariff. At present it amounts to four per cent., and assum- ing that this be raised to 20 per cent., and assuming also that the excise duty on rum, &c., be proportionately increased, I estimate that the total additional revenue would not reach Rs. 450,000 per annum, or say, Rs. 300,000 for eight months.
6. After taking into consideration the savings proposed to be effected by Sir Graham Bower on this year's estimated expenditure, and after allowing for the revote of unexpended balances, and for unprovided, but absolutely necessary, expendi- ture, until the 30th of June next, and after an examination of the estimates of revenue, I am of opinion that a deficit of not less than Rs. 800,000 will have to be met at that date; for the crop of sugar was estimated at 160,000 tons, and I am advised that it will not reach 130,000 tons, which will cause the estimated export duties to fall short by Rs. 96,000; the customs duties and other sources of revenue will, I think, fall short of the estimates by Rs. 100,000; whilst I fear that not more than a half of the estimated increase in railway earnings (Rs. 437,536) will be received; and this calculation of the probable deficit makes no provision for any abnormal, but by no means impossible, charges on the Exchequer.
7. It would seem, therefore,
Income Tax, eight months Rs. 33,000. Surcharge, &c., eight months Rs. 300,000.
Ra. 330,000.
that after the imposition of an income tax, and after raising the surcharge on customs duties from four per cent. to 20 per cent., and after increasing the excise duties equivalently, the sum of revenue would fall short of the sum of expenditure by Rs. 467,000, and even this inade- quate and unsatisfactory result could not, I think be obtained under existing conditions, for I feel sure that the Council of Govern- ment, as at present constituted, would not consent to the two measures under con- sideration, namely, the imposition of a general income tax, and the additional indirect taxation indicated above.
8. In order, therefore, to carry either, or both, of these measures, the suspension of a number, not less than two, of the nominated members of the Council, and the substitution in their places of an equivalent number of official nominees, would be necessary; but I may here draw attention to the fact that those substituted official nominees would be sent to the Council for the purpose of carrying a measure to impose a tax upon their salaries, and it is hardly necessary, in view of the conditions obtain- ing in the Civil Service here, for me to refer to the difficulties to be encountered in adopting such a course.
9. Again, it would, I submit, be most invidious to select two of the nominated unofficial members for suspension, and it would be hardly possible to avoid the removal of them all.
10. That remedial measures in connection with the constitution are probably necessary, that they are certainly imperative with regard to the Civil Service of the Colony, I have already ventured to submit, but I would again also urge that the carrying out of those measures would be facilitated if the present financial crisis can be met in the manner which I have proposed rather than by the enforcement of extra taxation under either or both of the schemes indicated above.
11. And in this connection I would submit that more than a third of the financial year will have elapsed before any effective legislation can be carried; that the annual estimates and the Appropriation Ordinance have been passed here, and that it is expedient to avoid if possible the odium of enforcing the passage of measures for raising additional revenue which may probably prove inadequate.
• No. 191.
287
12. I would, therefore, suggest, with regard to this renewed proposal for a loan, that power should be taken by a short enactment to raise an amount not exceeding Rs. 1,000,000 for the purpose of reimbursing the Treasury in certain of the sums expended on works of an extraordinary nature during the years 1902-03, 1903-04, and to be expended during the current financial year (see report of the debate enclosed in Sir G. Bower's despatch under reference),* and that, if the loan cannot be issued at once, the Crown Agents be authorised to make arrangements for the advance from time to time of such sums within the above limit as may be required.
13. It is possible that the full amount may not be needed, and in that case the suggested advance would be accordingly lessened, or repayments could be made at the end of the present financial year, and by that time opportunity would be afforded for the consideration not only of the steps to be taken in the direction of the remedial measures to which I have referred, but of the most feasible methods of establishing in the future an equilibrium between revenue and expenditure.
14. I venture, in conclusion, to make a more or less personal appeal to you for favourable consideration of my suggestions and proposals. Circumstances upon which I need hardly enlarge render it almost impossible for the officer charged with the duty of administering this Government to obtain assistance from his constitutional advisers; there is much leakage in the consideration of executive and administrative questions, and he is practically alone. I respectfully ask, therefore, for time, and for the enabling power to prepare more fully considered measures for any necessary changes and reforms, the satisfactory formulation of which for submission to you would be most difficult, if not impossible, in the present impasse.
36604
(Paraphrase.)
No. 222.
I have, &c.,
CAVENDISH BOYLE.
MR. LYTTELTON to GOVERNOR SIR C. BOYLE. (Sent 12 noon, November 12, 1904.)
TELEGRAM.
[Answered by No. 227.]
I have considered carefully your despatches of 20th September and 25th Septem- ber. The objections to a loan in aid of revenue are insuperable. There must be fresh taxation to restore financial equilibrium, but I am willing to leave decision as to form which such taxation should take to Colonial Government and Legislature. There must also be reduction of expenditure, and especially of the excessive Civil Service.
If the Legislature agrees on these points I am willing to sanction a loan for meeting items mentioned in Leclézio's motion (see Officer Administering the Government's despatch No. 236, of 1st July), except rolling stock, permanent way material, and additional buildings. This would give nearly Rs. 1,000,000, and would enable you to carry on until the new taxation is productive.
If
It must be understood clearly that the produce of new taxes would be devoted to replenishing surplus balances now exhausted, and also that the above proposals hang together, and must be accepted or rejected as a whole by the Legislature. accepted one loan might be issued for above amount plus the sums of £80,500 autho- rized by Ordinances No. 19, of 1903, and No. 49, of 1903-4, and the necessary Ordi nance might empower the issue of not more than, say, £69,500 for meeting expenditure on certain public works to be scheduled, the cost of which has in part been pro- visionally met from revenue. The Loan Ordinance should be issued under terms of Inscribed Stock Ordinance.
The Loan Ordinance must not be passed until taxation Ordinance has been assented to, nor until the Legislature has pledged itself by resolution to co-operate in the reduction of expenditure and of the Civil Service.
• No. 191.
† Nos. 219 and 221.
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