PUBLIC RECORD OFFICE
Reference :-
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C.O. 882
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PUBLIC RECORD OFFICE, LONDON
ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH-NOT TO
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ngvaj nai expenditure from general revenue for the purposes of this Ordinance Shirin deducted from the amounts received as duty, and the percentage on account The Army Council have not The Defence Contribution struck on the balance bern ully informed as to the changes incidental to the new opium and liquors pohey, but from a perusal of the Ordinances concerned (which they have obtained since the receipt of your letter) they are unable to perceive any analogy between the revenue derived from chandu and that derived from spirits It is clear from the Liquors Revenue Ordinance that there does not exist in connection with liquor any reproductive Government undertaking, similar in any sense to (e.g.) the Government wharves at Penang (see paragraph 5 of the Governor's despatch, No. 460, dated 18th November, 1909), to which the principle of assessment of net receipts is applied, and they are of opinion that the Colonial invernment should be requested to repeal the section (56 (1) - referred to, together with any other similar provisions that may exist, In view of Treasury letter of but which have not been brought to notice, 22nd June, 1599, to the Colonial Office (a copy of which was forwarded to this Department on the same date). laying down that each case in which it is proposed to assess the percentage on net receipts should, as it arises, be considered on its merits by the three Departments concerned, the Council have learned with some surprise that such a section has been embodied in the Ordinance without previous reference to this Department or (as they understand) to the Treasury.
7 It is, however, understood that the preventive service established for the purpose of the Chandu Ordinance (see paragraph 4 above), carries out the same duty in regard to spirits If, as might appear from Appendix G of the Colonial Estimates for 1910, the Colonial Office, in asking in paragraph 7 of their letter for the application to spirits of the prinicple of assessment of net receipts only," have in view simply the deduction from the chandu revenue of the cost of the proventive service as a whole, the point would be met by the suggestion in para- graph 5 above that the cost of the preventive service should be taken into account in fixing the amount of aps Imperial grant-in-aid.
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Paragraph 9 In regard to the treatment of refunds of revenue, I am to state that there appears to be no reason why the procedure agreed to in the case of Hong Kong should not be sanctioned generally in the case of the Eastern Colonies with effect from the commencement of the latest year for which the revenue accounts have not yet been furnished to this Office.
9 Paragraph 10. The proposal to exclude from the assessable revenue all sums paid out by the Colonial Government and subsequently reimbursed is, however, on a different footing. The receipts included under the general heading Re- imbursements in the Colonial Blue Book are of a varied character, and amounted While some of them have been specially exempted in 1999 to some 319,000 dollars.
The exemption of those from assessment, others have always been included. hitherto assessed would involve a departure from the arrangements made when the
It was always recog contribution was fixed at its present percentage of revenue. nised (see paragraph 14 of this letter) that improvements in book-keeping were not to be allowed to affect the amount of the contribution without the consent of the Treasury and the War Office, and the Council are therefore not prepared to concur in the comprehensive proposal made by the Colonial Office.
10. Paragraph 11. The Colonial Office propose to request the repeal of Section 6 (2) of the Liquors Revenue Ordinance, No. 22 of 1909, and of Section 38 of the Petroleum Revenue Ordinance, No. 19 of 1909, provided that their Lordships Under the agree to an Imperial grant-in-aid of £60,000 a year for three years. former of these sections, which re-enacts Section 113 of Ordinance 19 of 1906, the Governor may direct that a sum not exceeding three-eighths of the liquors revenue assessable to contribution be paid to “the Improvement Fund," such payment being excluded from the assessment to Military Contribution. The existence of this section was first brought to the knowledge of this Department by the deduction from the assessable revenue for the years 1907 and 1908 of the sums of $177,024.69 and $308,000.51, involving deductions of £4,130 and £7,187 respectively from the contributions that would otherwise have been paid in respect of those years. The corresponding deduction from the estimated contribution for 1910 amounts to £9,823. The deduction was objected to by this Department on the examination of the 1907 contribution. In a letter dated 8th June, 1909, the Colonial Office under- took to make enquiries, but have since explained, in a letter dated 7th June, 1910,
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that the communication to the Governor was postponed pending settlement of the Their Lordships' attention question of the proposed interdepartmental committee. is drawn to the magnitude of these deductions, and to their rapid growth, in order again to emphasize the necessity for all ordinances affecting the principles on which the Military Contribution is assessed to be referred to this Department before promulgation
11. It is not clear that the repeal of Section 46 (2) of Ordinance 22 of 1909 would enable the Colony to repay the amounts deducted under the Ordinance of 1906. Steps should therefore be taken to secure that any deductions that have already been made under that Ordinance should be cancelled, and the amounts due in respect of Military Contribution thereon paid to this Department.
12. The proposed repeal of Section 3 of the Petroleum Ordinance (No. 19 of 1909), which provides that only the amount by which the receipts from petroleum plus the amount assessable under the Chandu Revenue Ordinance, 1909, might exceed the sum of $4,236,000 should be assessable to contribution, would be the only course consistent with the whole principle of the Military Contribution (see War Office letter of 8th October, 1909), and the Army Council have learnt with surprise that such a provision had already been included in an Ordinance of the Colonial Government without any previous consultation with this Department. The Council are not aware what significance is to be attached to the figure $4,236,000.
13.
As regards the propriety of excluding from assessment any grant-in-aid that their Lordships may propose to offer to the Colonial Government, I am to refer to War Office letter, dated 18th May, 1910, on the subject of the proposed grant in aid of the Hong Kong Postal Revenue.
The Colonial Office claim appears to be 14. Paragraphs 12, 13, 15, and 16. that classes of receipts which were included in the assessable revenue when the Military Contribution was fixed on its present basis may now properly be excluded, without any prior reference to the Treasury or the War Office, provided that in While each case the charge is made in the interests of good administration." the Council are willing 'to assume that such a change would not be sought with any object other than that of good administration, they are unable to assent to Nor do they feel such a comprehensive proposal with so shadowy a proviso. encouraged, looking to their experience in regard to the matters dealt with in this letter (to go no further), to express an unqualified concurrence in the view that the control exercised by the Secretary of State (for the Colonies) is sufficient adequately to safeguard the interests of the War Department." In this connection, I am to point out that not only were the recommendations of the Committee of 1895 based (as stated in paragraph 13 of the Colonial Office letter) on the assump- tion that no important change in the revenue system or in the method of bringing revenue to account would be authorised without the concurrence of the Treasury, but in Treasury letter of 14th June, 1895, to the Colonial Office, a copy of which was forwarded to this Department on the same date, this important principle was expressly laid down. The Army Council are forced to conclude that the reduction of the Military Contribution by sums such as those mentioned in paragraph 10 of this letter would not be regarded as "really important" enough to require obedience to this ruling, though they cannot suppose that the local Government, in considering the financial aspect of its reforms, failed to notice this incidental effect.
15. Dealing with the particular classes of receipts in dispute, viz., the recovered Hospital Charges and the School Fees, the Council are unable to see any ground for the view that the institution of a Hospital Board and of a Central Board of Education justifies the exclusion of these receipts from the general revenue of the Colony for purposes of assessment to Military Contribution. am to enclose, for their Lordships' information, a copy of correspondence between this Department and the Colonial Office on this subject (beginning with Colonial Office letter, 13th July, 1909, and ending with War Office letter, 24th May, 1910).
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In connection with this subject a further question arises in regard to the revenue to be raised by an education rate. It appears from page 113 of the Colonial Estimates for 1910 that, whereas education expenditure has hitherto been defrayed from the general revenues of the Colony (including school fees), the corres- ponding charge in 1910 and future years will be met partly from general revenue,
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