CO882-(4-5) — Page 142

PUBLIC RECORD OFFICE

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سلسالسا

Reference :--

C.O. 882

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

5 PUBLIC RECORD OFFICE, LONDON

This argument is not intended to prove that the colonists should pay nothing, but to show that a reasonable division would still leave the larger share on Imperial funds. If we had a system under which these places would have a voice in peace or war, and in other matters common to the Empire, the calculations of relative military charges might have some weight.

Those countries, the taxation of which the Chancellor of the Exchequer compares with that of Hong Kong, are sovereign states, whose defences are maintained solely for the protection of those interests which they themselves ad- minister

The principle sought to be laid down by the Chancellor of the Exchequer that the Imperial Government has "a right

to fix, in "the last instance, the amount of the con- tribution," is in fact a claim to enforce taxation without any form of representation; a principle which, after long experience, has been abandoned by this country.

Even in the case of a Crown Colony, it is not now possible to act in the high-handed manner which was practicable a quarter of a century ago, when the Duke of Newcastle was Secretary of State.

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To force a measure on an unwilling Council in the teeth of the non-official members-putting aside, for the moment, the Government Officers, who would naturally hold views of their own on such a subject-would place a heavy strain upon our Crown Colony system.

What is now being done is practically a redis- tribution, to a partial extent, of the Forces of the Empire in conformity with the military require- ments of the present day. In certain cases, this policy has involved the removal altogether of an Imperial garrison, e.g., from Australia, New Zealand, and Canada. In other cases it has involved an increase but this arises from strategical necessity, not from increased local need. Again, is the total strength of the British Army to be raised? If so, is this to be done for the special defence of Calanial property or for purely Imperial considerations?

If the strength is not being raised the increased oost to the British taxpayer is merely the increased cost of maintenance between one station and another.

Asame for example that the additional battalion wanted for Hong Kong could be taken from Gibraltar for which a smaller garrison will in the future suffice. Then the British taxpayer will only have to bear the additional cost of maintenance at the more distant station of Hong Kong. This would seem no justification for the further demand of the Chancellor of the Exchequer over and above the substantial increase agreed to by a Cominittee on which the Treasury was represented.

The Chancellor of the Exchequer's Merno- randum excludes English local municipal revenue, which is included in the Hong Kong State

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revenue. Therefore, to make a fair comparison, he should include the municipal revenues of the United Kingdom. These (excluding loans and contributions from general revenue) appear, from page 236 of the "Statesman's Year-Book," to be about £50,000,000, making our total revenue £136,000,000 (instead of £86,000,000). Thus the British taxpayer, out of every pound of revenue, contributes to the Army and Navy (excluding interest on National Debt) 48 3d.

instead of 78.

On the other hand, taking the last two years, 1886-7, and excluding the special expenditure on the new Defences, which has amounted altogether to £118,000. Hong Kong spent on an average as military contribution $128,500 out of a revenue of $1,400,000, ie., at about the rate of 1s. 10d. in the pound.

As to the charge per head of the population-- according to the census of 1881-Hong Kong contained 160,000 people, and in 1887 the estimated population was under 186,000.

Taking this last figure the charge per head

£25,000 2. 8d.

186,000*

But, in comparing charges per head, the relative poverty of the inhabitants has to be considered. This cannot be directly estimated. but it may be noticed that of the above 186,000 over 175,000 are Chinese, many of them exceed- ingly poor, of whom 30,000 live in boats.

The Chancellor of the Exchequer says that the fortunate Hong Kong taxpayer "pays no customs duties, no excise duties, no income tax.”

As regards the first, Hong Kong is, and always has been, a free port. To this fact it owes its present prosperity in comparison with other ports. To introduce customs duties would destroy that prosperity and upset the whole course of British trade with the East. Such a proposal would be strenuously resisted by the whole mer- cantile and shipping interests of this country.'

It is not strictly accurate to say that no excise duties are levied, when there is an item of $244,000 in the Colonial revenues on account of spirits and opium. Again, it is inaccurate to say that the Hong Kong traders do not contribute to the Income Tax. They, on the contrary, contribute very largely. For instance the Indo-China Steam Company pays (Imperial) Income Tax on the whole of its net earnings, not one penny of which is made in this country.

The branches in Loudon of local banks, insurance companies, mercantile houses, &c., pay in England Income Tax on all profits attaching to such branches or agencies, and all dividends earned in the Colony and paid here have again to pay Income Tax. Indeed, all profits made in the Colony and paid in this country contribute to the Imperial revenue through the Income Tax, and it is impossible to carry on the financial operations, the China loans, and other business of magnitude, mainly controlled in or from the Colony, without paying taxation in England in the shape of Stamp Duties and in other ways.

Probate Duty, again, is paid to the Treasury on the estates of British subjects who die in England possessed of assets in the Colony, not to mention their landed estates in this country paid for by their earnings in the Colony.

Lastly, the memorandum in suggesting that the colony should pay half the cost of the troops, omits to notice the rate per head which would thereby be thrown on the colonial taxpayer. Half the cost would mean £140,000 or (taking the dollar for the moment at 3s. 4d.) $840,000 out of a revenue of $1,400,000, ie, 12s in the pound as against 4s. 3d. in the pound paid in this country.

Again, the charge of £140,000, would, taking the population at 186,000, amount to 15s. per head as against 168. in this country, and to propose an increase of taxation to make up the difference between 2a. 8d. and 15s, per head is manifestly out of the question, especially when we bear in mind that the bulk of the population consists of poor Chinese.

To get the additional £20,000 recommended by the Committee representing the Treasury, War Office and Colonial Office will involve some considerable increase of the present taxation.

COLONIAL OFFICE,

December 19th, 1888.

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