PUBLIC RECORD OFFICE
Reference :--
C.O. 882
9
PUBLIC RECORD OFFICE, LONDON
ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH—NOT TO
186
and in 1909, $12 062,029, on which a military contribution of $1,929.272 and $1,636,505 respectively was paid (Colonial Reports, No 6631⁄2, viz. 144 per centum and 135 per centum I say nothing of the deductions from revenue assessable to military contribution which are brought about by the recent establishment of an educational rate and a rural board rate which, I believe, involve the expenditure of considerable funds on which no military contribution is paid. I presume that the 91 per centum in Ceylon is similarly calculated on revenue exclusive of municipal taxation In Mauritius the percentage laid down by law as contribution for defence is 51 per centum of revenue, but only the net revenue (if any) of railways and (Report of Royal Commission, 1909 [Cd. 5185 . waterworks is taken into account p 45, footnote) As the gross revenue from railways formed nearly one quarter of the total revenue, and as the railway does not at present pay its way, the deduction of this large sum ($2,325,959. from the revenue assessed to military contribution reduces the percentage. if calculated as in Hong Kong, to a very small one indeed The a erage revenue for three years is given on page 25 of that report as Even adding to the Rs 9,7-0,055, and the military contribution at Rs. 406,499. latter the rebate on Military Customs (Rs. 35,000) the percentage is only 44. and It this again is greatly reduced by the fact that municipal revenues are excluded would appear from these figures that Hong Kong pays far more heavily than the other Eastern Colonies including the Federated Malay States, which are equally dependent for defence on the Empire's resources.
thy In the second place, I submit respectfully that when the Colony was invited to pay 20 per centum of its revenue and agreed to do so for its land defences, it was undoubtedly interred that those defences should, in the opinion of the high authori ties, be reasonably adequate. That they are very far indeed from being reasonably adequate has been the view of Admirals Lambton and Winsloe, and of Generals Broadwood and Anderson, whose strong representations as to the inadequacy of the This was also the view garrison and its armaments I have transmitted to you. taken by the Inspector-General of the Forces, Sir John French, who reported at the To this view, publicity and currency has instance of His Majesty's Government. now been given by General Sir R. Pole-Carew's recent statement (14th March, 1911), in Parliament, when he used the following words: "We find at Hong Kong one British battalion, two native, and a few guns neatly arranged on the sky-line to be shot at I asked a famous Admiral how long it would take to knock them out. He said. About four hours
་
(c) The constant argument of the Unofficial Members, who urge that the con- tribution is beyond the resources of the Colony, is that the garrison here is largely maintained for Imperial purposes: (a) for the defence of the naval docks, and (b) for the defence of British interests and British lives and property in Peking, I have argued at great length Shanghai. Tientsin and other places in China
against this view, pointing out that the existing garrison is none too large to protect Hong Kong itself in case of attack, but Lord Haldane's recent utterance (15th March, 1911). in Parliament lends colour to the argument. He said: "We have large interests there in places like Hong Kong, where we maintain a garrison which would be by no means in excess were there to be a rising, which there was some years ago with the Boxers." I need hardly remind you that the Boxer rising was entirely confined to China. Sir J. Jordan, writing on 12th April, 1909, used similar language. saying that: "In case of complications, Peking depends on Hong Kong or India.
The well-to-do British communities of Shanghai and other Treaty Ports make no contribution in aid of these land forces.
(d) I gather from your telegram of May 16th,* that you are not prepared to approve my proposal that the annually decreasing amount of revenue required for the service of the railway loan should be earmarked and exempted from the mili- tary contribution, while the annually increasing receipts from that undertaking If that be so, I venture to solicit very should be assessed as ordinary revenue. earnestly your reconsideration of this proposal, which I do not primarily advance with a view to reducing the military contribution, but because it appears to me an anomaly that the burden should fall most heavily upon the present generation of taxpayers just when the work is least remunerative.
(e) Finally, I would observe that, throughout this despatch, I have referred only
• No. 188.
*
187
The Colony also maintains a corps
to the contribution to the Imperial Exchequer of Volunteers at an average cost for the last nine years of $43.639
I have, &c.,
F. D LUGARD.
Governor, &c.
PS Since writing this despatch the Honourable Mr. H. E. Pollock, K.C., has a-ked several questions in Council, of which I enclose a copy, together with my reply
Enclosure 1 in No 194
HONG KONG LEGISLATIVE COUNCIL. 1st June, 1911. The Military Contribution.
Honourable Mr. EDE moved the following resolution standing in his name:- That it is desirable that the military contribution should be fixed at the annual sum of one million dollars ($1,000,000)." In doing so he said:-Your Excellency, the Unofficial Members of this Council are unanimous in the opinion that this ques- tion should be brought up for debate at this time, viz., before the Imperial Con- ference closes. I fully realise that the question of the military contribution is a knotty and much debated one, but in moving the motion I am encouraged by Your You there Excellency's attitude as shown in the debate of the 24th September, 1908. stated that you approached the matter of the military contribution with an open mind, possibly with a bias in favour of the view that the contribution weighed foo heavily, and that you were fully prepared, if your examination of the matter should confirm that view, to appeal to the Imperial Authorities for its reduction. That statement warrants that if it can be shown by reasoned argument that the contribu- tion at present paid by the Colony falls unnecessarily heavily on the taxpayer, relief may be counted upon The following factors affect the question (1) The ratio of taxation at present levied. (2) The cost of Defence of Trade and Property. It has been stated, and is believed by a section of the community, that we are more lightly taxed than residents at Home, and I deem that the time has arrived when this state- ment, which has for so long passed current for truth, should be disproved. I preface my remarks by saying I have studied all available statistics fairly fully. I have examined the incidence of taxation on different classes of the population, but I have discovered it to be impossible by this means to arrive at any tangible result either for or against the argument for a reduction. I propose, therefore, to treat the whole question from the point of view of the law of average, a very simple law and easily understood by the people. Following this law, to arrive at the burden of taxation per head one must divide the revenue by the population. The gross revenue of Great Britain in the year 1909, for which full statistics are available, was Imperial £153,000,000, Municipal £163,000,000, or, in all, £316,000,000, the population in the same year being estimated at 46,000,000, or a taxation of £6 17s. per head. The gross revenue of this Colony in the same year amounted to $6,800,000, while the population here and in the New Territory was 429,000, or, say, $16 per head, which translated into sterling equals £1 9s., or rather less than one-fifth of the taxation per capita at Home. This at first sight appears to support the contention of those who believe that we are too lightly taxed, but the most important factor has yet to be reckoned with, and that is the ability of the taxpayer to stand the burden of taxation. It is very difficult to arrive at the average wealth of the individual in Great Britain. At first sight the income tax collected would seem to give one a fair indication, but this is misleading, in so far as many below a certain figure per annum pay no income tax at all, and various books of statistics differ as to what proportion this class is to the whole. Another method of estimating the average wealth per head is to take the gross income brought under review of the Department, which in 1908-9-the latest available--was £1,009,000,000 sterling; but even this method is faulty, by reason of the fact that it still excludes a large percentage of the population whose incomes are not brought under review at all, and one must perforce look else- where for more exact figures. In L. G. Chiozza Money's book, " Riches and Poverty," published in 1904, one finds that the national income of the United Kingdom in 1903 was estimated at £1,710,000,000 sterling, but this figure has been challenged