CO882-(3-4) — Page 628

PUBLIC

RECORD OFFICE

Reference:→

TELCO. 882

4 PUBLIC RECORD OFFICE, LONDON

ALLY WITHOUT PERMISSION OF THE BE REPRODUCED PHOTOGRAPHIC- COPYRIGHT PHOTOGRAPH-NOT TO

Total reduc-

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Giving a total of 224,786 Rupees against 397,646 estimated by the Committee, and on page 43 of 312,203 estimated by Sir J. Longden,

tions, as given

print.

Allowance must be made for the time which will necessarily elapse before the reduc- tion can be brought fully into operation, and it would probably not be wise to count upon a larger saving in the coming year than one third of the amount specified above, i.e., Rs. 74,928.

To this can be added (if the view which I have adopted in the latter part of the 23rd par. is correct), a sum of (say) at least 50,000 rupees on account of hospitals, making a total of reduction on the ordinary services of the Colony in the coming year of Rs. 124,928.

31. Excluding Railways, on which account no definite estimate of any possible saving can of course be made, until careful inquiry has been instituted, as proposed in paragraph Military contri- 25, there appears to be no item of expenditure still to be considered, with a view to

retrenchment, except that of the Military Contribution.

bution.

Pages 14 and 15 of print.

l'ar. 70 of Despatch.

Possible addi- tions to

reranno.

Views of Com- mittee. l'age 13 of print.

Governor's

viewa, para.

20-1 of Despatch.

Mr. Dickson's views.

I shall not now attempt to discuss the history of this complicated question, but will simply state that I agree with the conclusions arrived at by the Committee in their temperate and clear summary of the case. I am satisfied that under the present circum- stances, the Colony cannot afford to continue the payments hitherto annually made under this head, and I am in communication with the Lords Commissioners of the Treasury and the War Office, with a view to urging, at any rate, a temporary reduction of a considerable amount. I should have been glad if it had been found possible to diminish the number of troops now stationed in the island, but this the late Governor has stated that he is unable to recommend. I shall hope to have the advantage of your opinion on this important matter, as soon as you have had an opportunity of examining it on the spot aud in consultation with the Executive Council.

When I have ascertained the views of the other departments concerned, I shall address you further on the subject, and in the meantime, I shall include in my calculation of possible retrenchment, a minimum of Rs. 240,000 under this head, bringing the total amount up to Rs. 364,928.

32. I now leave the expenditure side and turn to consider additions which may possibly be made to the revenue.

The Committee, with the exception of Mr. Dickson, have unanimously adopted a scheme suggested by Mr. Halliley, which by slightly raising the duty on imported grain by substituting weight for measurement in levying the duty, and by imposing a tax upon Kerosine oil, is estimated to add to the revenue a sum of Rs. 201,650. [It may be noticed in passing that there is apparently a slight inaccuracy in the figures in par. 9 of Mr. Halliley's letter, a charge of 30 cents for 100 lbs. on paddy, being equal to an increase on the old tariff of cent per bushel or 45 lbs., not 1 cent as stated],

Sir J. Longden accepts the change in the mode of levying the duty, by which he estimates a gain to the revenue of Rs. 10,000, and would impose a duty on Kerosine and certain other imported articles, thereby providing an additional sum of Rs. 110,432, but he is averse to any increase of the duty on imported rice.

"

Mr. Dickson is prepared to go further than either Sir J. Longden or his fellow members Page, 25, 26. of the Committee in increasing taxation; he would raise Rs. 500,000 by "additional

import duties

and Rs. 357,000 by additional export duties, but he would leave the duties on grain "undisturbed, except as to method of collection by weight instead of "measure." I shall now consider these respective views.

Page 25.

Export duties, page 26.

Import duties.

33. Mr. Dickson proposes the increase in export duties, or rather the imposition of duties on all exports, including native produce, with a view to meeting in great measure the charge for hospitals. He states that when formerly imposed with a view to paying for the Kaudy Railway, they were found not "to place-Ceylon produce at a disadvantage as compared with other countries"; that they would fall on the classes which chiefly benefit by the public hospitals, and that the principle of levying an export duty has been concerled in the case of estates held by Europeans.

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I am not prepared to admit the last argument; the export duty on coffee was devised simply as a convenient means of collecting a special rate which had been in existence for some years, and it bears little or no analogy to a new export duty imposed on the community at large for the purpose of aiding the general revenue. I prefer to rely on import duties only.

34. Under the head of import duties it is necessary to consider, first, Mr. Halliley's suggestion for very slightly raising the duty on imported grain. The proposed increase is 3 cents per bushel on all grain excepting paddy, and cent per bushel on paddy.

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In favour of this very small increase of duty, it is to be observed that it would fall, not on the agricultural classes, but on the Tamil immigrants and the inhabitants of the towns, who, according to the Report of the Grain Tax Commission appointed in 1877, would seem to be well able to bear it.

Further, the increase is so inconsiderable that I am assured it would practically not affect the price of food; if it were otherwise, it is to be presumed that the native members of council who formed part of the Committee and signed the report, would have raised some objection to the proposal.

There is, however, so much objection to the taxation of imported food that I could nct consent to this mode of raising a revenue unless other courses had proved ineffectual.

The substitution of weight for measurement in the collection of the duty should be Par. 20 of Despatch. carried out, effecting an addition, according to the Governor's estimate, of some Rs. 10,000.

35. As regards duties upon other imports than grain, Mr. Dickson states that "the tariff could certainly be revised so as to yield Rs. 500,000 in addition to the "present duties on imports, and it would not be severely felt." If this is the case, it may be assumed that an increase estimated to produce any less amount would not have Par. 69 of the effect which the late Governor dreads, of checking trade.

I leave to your Government to settle the details of this increase, which I presume can be carried out without encouraging illicit importation of articles from India, and I take for my present purpose Rs. 300,000 purely as the minimum sum to be derived from increased import duties.

36. If to the figures given above on account of retrenchment, viz., Rs. 364,928, be added 10,000 rupees on account of the change in the method of collecting the. import duties on grain, and 300,000 rupees on account of increased duties on other imports, the total present relief to the revenue amounts to Rs. 674,928. This sum falls short of the deficit which Mr. Dickson estimates in 1884, viz., Rs. 860,600, and still more of the million rupees which was stated earlier in this despatch as the sum roughly to be aimed at.

I trust, however, that in some of the details given above the actual results may prove more favourable than the moderate anticipations which have been formed, and I think it well that for the ensuing year, at any rate, no further steps should be taken than those indicated above, unless it be in regard to the stamp duties to which I have referred in the succeeding paragraph. If these measures are subsequently found inadequate, further additions to taxation can be considered, and retrenchment must be enforced in the matter of education and hospitals, and in other directions.

I shall look also eventually to decrease in railway expenditure, and in course of time further instalments of the reductions which have been specified in preceding paragraphs will fall due.

37. Before leaving the subject of the finances of the Colony, I wish to call your attention to one item of revenue, viz., the stamp duties, which, for want of exact information, could not be included in the previous calculation of ways and means.

Despatch.

The late Governor in the 69th paragraph of his despatch states, "Štamp duties may, I stamp duties. "think, be fairly imposed or increased on legal documents used in all civil cases in the "Gansabbawas as well as in the higher courts," but neither in his despatch nor in the Committee's Report is there any further reference to the question, whether some appreciable addition might not be made to the revenue under the general head of Stamps. I understand that these duties in Ceylon are low, sa compared with the English or Indian standards, and that they might be revised in the interests of the revenue without unduly pressing on any class of the community.

As regards judicial stamps, I presume that the rates fixed in connexion with the civil courts of the Colony (excepting the Gansabhawas) might be raised without making legal proceedings unduly expensive; it is reasonable, as the Governor points out, that the cost of the administration of justice in civil matters should fall upon those who take advantage of it; and careful inquiry should be made into the cost of these courts as compared with the amount raised by judicial stamps, so as to ascertain whether law proceedings can be fairly taxed more highly than they are at prosent.

It was decided some short time ago not to impose any fees in respect of the petty cases tried before the village tribunala, and I am not inclined now to reverse that decision, seeing that in any case but a trifling amount could he derived from this source.

The scale of duties on licenses, bonds, articles warrants, and similar documents, is apparently capable of revision with a view to abolishing exemptions in some cases, and raising the standard of payment in others.

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