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PUBLIC RECORD OFFICE

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PUBLIC RECORD OFFICE, LONDON!

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196

Their Lordships hold that certain amounts, as shown in the statement formshed by the War Office, which have been deducted from the military contri- antion constitute a debt by the Colony to the Imperial Government with regard to which a settlement must be arrived at before further consideration can be given to the effect of the opium policy of His Majesty's Government on the finances of the Colony

3 As regards the rent of Government buildings let for profit, 1 am to enciose a copy of a letter addressed to the War Office on the 7th of June, 1910, from which it will be seen that Lord Crewe undertook, in deference to the wishes of the Army Council, to request the Governor to include the gross receipts from this source in the total revenue assessable to contribution.

With respect to the liquors revenue paid to the Improvement Fund. Mr. Harcourt fears that the earlier correspondence on the subject has been overlooked. I am to invite reference to the letter from this Department of the 21st of February, 1906,† forwarding a copy of a telegram from the Governor of the Straits Settlements, in which he proposed to meet the annual charges for the service of the loan raised to provide for the improvement of the Singapore harbour by the establishment of a special fund into which were to be paid the proceeds of special taxation of land near Sir John Anderson the river bank and of the increased wine and spirits duties. added that " after the present year two-fifths of the spirit farm receipts would be paid to the proposed fund."

5 Sir G Murray's letter of the 22nd of February, 1906, stated that their Lordships were willing that, for the purpose of calculating the military contribution, the proceeds of any special taxation imposed to meet the charges for interest and sinking fund on the loan should be excluded from the revenue of the Colony to the The Army extent to which such proceeds are required for the service of the loan. Council by their letter of the 1st of March, 1906, § agreed to the proposal on the lines suggested by the Lords Commissioners.

6. In accordance with this arrangement the Liquors Ordinance. 1906, con- tained a section (No. 113) which provided that the Governor might direct that not more than three-eighths of the moneys due from the farmer should be carried to a fund to be called the Impovement Fund, and that these payments should not be liable Section 86 (2) of the Liquors Revenue to be assessed to military contribution Ordinance, 1909, re-enacts Section 113 of the 1906 Ordinance.

7 The accompanying statement, prepared from the annual Estimates of the Colony for the years 1907-1911 inclusive, shows the respective amounts of the annual charges for the service of the loan; of the deductions to be made from assessable It will be seen that revenue, and of three-eighths of the estimated liquors revenue.

in no case are the sums deducted from revenue equivalent to three-eighths of the estimated liquors revenue, but that in the years 1908, 1909, and 1910, à round sum has been inserted which slightly exceeds the actual charges for the service of the loan. If, therefore, these deductions were actually made, there would appear to have been an over deduction of $20.786 in respect of these three years, and in that case the Imperial Government would seem to be entitled to receive 20 per cent. of that sum or $4.157; but Mr. Harcourt presumes that, as a matter of fact, the figures were adjusted in the course of payment and that only the amount of the actual loan charges was deducted This point can, if necessary, be cleared up by reference to the Colony

sures.

8. So far as these details are concerned Mr. Harcourt would suggest to their Lordships that a settlement has been arrived at. but as regards the other matters referred to by the Army Council and the Lords Commissioners, he regrets that he is quite unable to accept the views expressed in Sir G. Murray's letter and its enclo- It appears to him, moreover, that the whole question is so complicated, and that there are so many aspects of the question and so many points of detail to be considered, that, in view of the attitude which the Army Council and the Lords Commissioners of the Treasury have adopted, a solution can only he arrived at by means of an Inter-departmental Committee. such as was suggested in the letter from this Department of the 26th of August, 1909.||

9. I am to observe that the amount by which the revenue of this country benefits is wholly incommensurate with the irritation and friction which is caused in the Crown Colonies by the present arrangements, and I am further to suggest

§ No. 96.

| No. 159. ‡ No. 95.

• No. 176.

↑ No. 94.

197

that it is open to argument whether it would not eventually prove to be more in the interest of this country that the amount now devoted to military contribution should be expended on the development of the resources and trade and shipping facilities of the Colonies concerned-a development which in present circumstances is being hampered by lack of funds both in the Straits Settlements and in Hong Kong Mr Harcourt considers that the present time, when the main source of the revenues of the Straits Settlements and Hong Kong has been doomed to early extinction by a policy initiated by His Majesty's Government, with which the Colonies cannot be expected to sympathise, is specially opportune for a reconsideration of the whole question of the military contribution Temporary relief has been given in the case of Hong Kong, but Mr Harcourt is strongly of opinion that such palliative measures will not remove the present deep-seated discontent, which will increase as time goes on and the suppression of the opium traffic progresses.

10. Mr Harcourt therefore again invites the Lords Commissioners and the Army Council to agree to the appointment of an Inter-departmental Committee to consider de norn the whole question of the military contributions paid by the Eastern Colonies.

A copy

of this letter has been sent to the War Office, and I am to request

the favour of an early reply.

Enclosure in No. 196

Annual Charges

I am, &c.,

G. V. FIDDES

Three-eighths of

Year

Estimated Liquors Revenue.

for Service of the Loan.

A mount to be Deucted from Assessable Revenue.

Over-Deductions.

*

1907

605,250

50,000

50,000

Nil.

1908

506,250

388,765

-400,000

11,235

1909

506,250

90,857

100,000

9,143

1910

1911

470,143.50

489,450

420,530

421,000

408

373,150

373,110

Nil

26608

SIR,

No. 197.

HONG KONG.

TREASURY to COLONIAL OFFICE.

(Received August 14, 1911.)

[Answered by L.F. transmitting copy of No. 198.]

Treasury Chambers, 12th August, 1911.

I AM directed by the Lords Commissioners of His Majesty's Treasury to request you to acquaint Mr. Secretary Harcourt that, subject to the addition of the words the British section of before" the Kowloon-Canton Railway," they approve the draft of the Ordinance to amend the Hong Kong Defence Contribution Ordinance, 1901, which accompanied Mr. Fiddes's letter of the 13th ultimo (20915/ 1911).*

My Lords will be glad, however, to receive from the Secretary of State an assurance, as in the similar case of the Straits Settlements (Colonial Office letter of 5th July, 1899/16849),† that he will instruct the Governor of Hong Kong that, in the event of any "reproductive undertakings other than railways or telephones being established by the Colonial Government, the principle of assessment of net

• No. 193.

† No. 16.

24858

N 8Page 571

198

reccipis to military contribution should not be extended to such undertakings with out previous reference to himself, in order that the question may first be submitted to And it will save departmental correspondence this Board and the Army Council. hereafter if each new case of a railway or telephone in the Colony to which the principle is to be applied is notified by your Department to the War Office as it arises, in order that the Army Council may be able to check the amount of military contribution payable from time to time.

I am, &c..

ROBERT CHALMERS

199

therefore, escape liability to pay military contribution. Similarly, the expendi- ture necessary to maintain country roads and to provide for the conservancy of country districts is debited to Rural Boards which derive a considerable revenue from assessments, licences, and taxes, none of which are assessable to military con- tribution. The amount of such municipal revenues excluded from the revenue assessable to military contribution in the Straits Settlements was $3,519,298 in 1909; and since it was fully understood, at the time that this Colony accepted Mr. J. Chamberlain's proposal to pay 20 per centum of its gross revenue towards defence, that the two colonies of Hong Kong and the Straits Settlements should be treated alike, it appears only just that the following items shown in the printed Estimates for 1911 may be so exempted:

26608

SIR,

(No. 250)

No 198

HONG KONG

THE SECRETARY OF STATE to THE GOVERNOR [Piggy to War Give and Treasury, 8 August, 191

[Auswered by No. 294.]

Downing Street, 19th August, 1911.

WITH reference to my despatch, No. 136, of the 18th of May,* I have the honour to inform you that the Lords Commissioners of the Treasury and the Army Council have agreed to my proposal as to the assessment of railway revenue for the military contribution.

2. I accordingly enclose the draft of an Ordinancet to amend the Defence Contribution Ordinance, 1901, and I have to request that you will introduce it into the Legislative Council." It should be passed without amendment.

3. I have further to request that, in the event of reproductive undertakings other than railways or telephones being established in Hong Kong, the principle of assessment of net receipts should not be extended to such undertakings without previous reference to the Secretary of State

I have, &c.,

L. HARCOURT

Class I

i Assessed taxes

1,403,000

ii. Carriage, chair, &c., licences

105,600

iii

Dog licences

5,200

iv.

Fines

66,000

V.

Hawkers' licences

26,000

vi. Special fruit licences

4,300

Class II.

vii. Cemetery fees

1,200

viii.

ix.

Chinese cemetery fees Householders' registration

2,000

1,900

Class III.

X.

Laundries

3,000

xi.

Markets

122,400

xii.

Ma Tau Kok slaughter house xiii. Slaughter houses

10,000

92,000

Class IV.

xiv.

Conservancy contracts

51,500

$1,894,100

29033

SIR,

No. 199.

HONG KONG.

THE GOVERNOR to THE SECRETARY OF STATE. (Received September 4, 1911.)

(Confidential.)

[Answered by No. 203.]

Government House, Hong Kong, 3rd August, 1911. IN my despatch, Confidential, of 8th June, 1911, paragraph ĕ (a), on the subject of the military contribution, I submitted that the percentage of revenue paid by this Colony, though ostensibly the same as the Straits Settlements, was in reality very much heavier, owing to the exclusion of certain items in the Straits which are here assessed to contribution, and I suggested for your consideration that if the present method of calculating the amount to be paid by this Colony is retained (in lieu of the method I suggested) the system of assessment should be made identical so as to remove the grievance which is so strongly felt and so frequently voiced by the community and Unofficial Members of Legislative Council. I have now the honour to request that the consent of the Treasury may be obtained to the exclusion from assessment here of a number of items of revenue which are now excluded in the Straits Settlements.

Boards.

2. The first of these items is the revenue collected by Municipal and Rural In the Straits Settlements all municipal services are provided by muni- cipalities with revenues which are distinct from those of the Government and which,

‡ No. 194.

No. 190.

↑ Enclosure in No. 193 (as amended by No. 197).

3. The next item concerns the liquor revenue, which, as you are aware, is derived from an import duty. In the Straits Settlements this import duty is collected by the Government Monopolies Department, which also collects t'e opium revenue. The whole expenditure of this Department is allowed to be deducted from the revenue, and it is upon the net profit only that military contribution is assessed. I request authority, for the purpose of assessing military contribution, to deduct from the item shown on page 9 of the Estimates, "Liquor Duties, $725,000," the sum of $55,704, being the total cost ($60,504) of the Imports and Exports Office (which is here charged with the duty of collecting liquor revenue) less the sum of $4,800, which was the estimated cost of the Department in 1909 before the duty upon liquors was imposed. The sum of $55,704 represents with considerable accuracy the actual cost of collecting our import duty upon liquors.

later

4. In the Straits Settlements an education rate is charged, and neither upon the receipts from this rate ($126,500) nor upon school fees (both are received by

address you an Education Board) is the military contribution charged. I may upon the subject of an education rate; meanwhile, I request that authority may be obtained for the exemption from contribution of the sums shown on pages 13 and 14 of the Estimates as follows

Public School fees Queen's College fees

Technical Institute fees

43,000

40,000 3,600

5. In the Straits Settlements a Hospital Board has been established, as a result of which the receipts from hospital brils ($65,700) escape military contribution. I request that authority may be obtained for the exemption from contribution of the sums shown on pages 13 and 14 of the Estimates as:-

2165)

Medical treatment Sick stoppages

28,500

1,700

N4

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