its sources of finance which should make for a proper sense of financial responsibility. If the Municipality is mainly dependent on a grant-in-aid, it is quite likely to try to get as much as possible out of the Central Government to spend in ways which will make it popular amongst its electorate. If, therefore, it had been possible to divide out functions and revenues on some systematic and logical basis, we should have, in broad principle, liked to see this done.
From the particular Treasury point of view, however, in the light of financial arrangements between the Colony and H.M.G., we should of course deprecate giving the Municipality such control over parts of the revenue as might weaken the general financial position of the Colonial Governments. We should certainly wish the same general control to be exercised both by the Governments and by H.M.G., over the Municipal Council's finances as is exercised over those of the Government of the Colony. Moreover, as you pointed out, the Council is an experiment and there is much to be said for going slowly at the beginning. If it works well,
If it works well, its financial powers can be increased and it is to be hoped that in the not too distant future, the complication of control by H.M.G. will be largely eliminated. I understood from you that it is still your intention that the Municipality should be given the revenue from rates and from the specific revenues arising from the responsibilities to be taken over by the Municipality, e.g. the licensing of vehicles. We have not received from you any estimate of how these revenues would compare with the functions to be taken over initially, but superficial examination of the Hong Kong estimates, suggests that these revenues ought to be largely, if not wholly sufficient.
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