CO537-2188 — Page 204

3 -

Comment

in my view be open to objection if the legislature were to transfer to the

Municipality any authority in respect of

other taxation.

It:

Sir M. Young repeated the fear expressed in the comment on (3) above, and said he thought the sentence as drafted in paragraph 3(g) of No.63 was at variance with the view expressed in paragraph 2(h) of our telegram at No.4

that

it would conflict with the fundamental principle of genuine financial responsibility if it were provided that, without the consent of the Legislature the Municipality could not increase the rates of existing taxation within its allotted field.

Paragraph 2(h) of our telegram at No.4 was based on (2) of Sir S. Caine's minute of 16/12/46 on 54145/4/46 Part 2. Mr. Roberts-Wray had not then studied the proposals, but when he did so (see X of his minute of 14th April) he drew attention to the fact that local authorities obtain the bulk of their revenue from rates and licence duties, but that it would be most unusual to enable a Municipality to levy taxes. His minute went on to say that Sir M. Young's proposals would involve giving to the Municipality freedom to raise money and dispose of revenues which a Colonial Govern- ment would not normally delegate even to a Legislature, let alone a Municipality. therefore informed Sir M. Young in paragraph 8(XII) of our savingram at No.30 of the comment we were proposing to include on this subject in the open despatch. Sir M. Young did not comment on this in his reply at No.49, and we therefore assumed he would have no objection.

We

Sir M. Young reaffirmed in the discussion with Mr. Seel and myself that his intention in this matter, as expressed in (h) of No.19, was that the Leg. Ca. should by resolution assign new sources of revenue to the Municipal Council as the scope of the latter's functions increased, and that thereafter the Municipality will control the rates of taxation within those sources. Mr. Seel and I discussed this after Sir M. Young's departure, and agreed that the re-draft now proposed might go some way towards meeting Sir M. Young's point, by making it clear that there is an "allotted field" of finances (this phrase was used in paragraph 2(h) of No.4, and we thought its omission in paragraph 3(g) of No.63 might have misled Sir M. Young into thinking that the Municipality will have no financial authority at all) within which the Municipal Council will have discretion, namely rates. This does not, however, meet Sir M. Young's point that the Municipal Council should be empowered to control the rate of taxation in respect of taxes assigned to it by the Central Legislature. But in view of Mr. Roberts-Wray's remarks on this point, we did not feel able to suggest any concession on the matter of principle. (Quite apart from any question of general constitutional principle involved, it is most unlikely that any concession in regard to taxation would secure Treasury agreement.)

Sir M. Young has not yet seen the proposed re-draft of this sub-paragraph.

/(5) Paragraph 8