CO885-(11-12) — Page 187

114

--- ་

PUBLIC RECORD OFFICE

Reference :-

C.O.882/12

PUBLIC RECORD OFFICE, LONDON

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

86

deplorable. In normal times I consider that a tax at the rate proposed might have been borne without difficulty. In the present acute depression I have serious doubts as to its effect and if these apprehensions prove to be correct the result would be most un- fortunate. The rates proposed should in my opinion be reduced by half in the case of houses over 10,000 in value with a maximum of 2 per cent., i.e., the per cent. rate would be continued up to Rs.15,000 in value and the higher rates reduced by half. This would apparently reduce the yield to some Rs.455,000 or say Rs.400,000.

10. The additional licence duties also appear to me to involve too severe an adjustment of rates and in these cases I would sug gest reduction of the rates proposed in some cases. As it is not possible for me to consult others on what would be appropriate figures I suggest the following tentatively :-

Manufacturer of wine Distiller

Banker

"

Rs.

Rs. 1,000 in lieu of 2,000 4,000

10,000 5,000

10,000

Too sharp an increase in the licences for wine manufacturing and distilling, would in my opinion serve to increase the tendency to illicit manufacture and distillation, which is already one of the most serious revenue difficulties with which the Government has to contend. The effect of these reductions would reduce the esti- mated yield of the tax from Rs.267,450 to Rs.184,450.

11. The reduced yield of these taxes for a half-year would be as follows:-

Occupiers tax, say

Licences, half-year Customs duties

Total

Rs. 400,000 92,000 124,500

Rs.616,500

Against this must be set remission of revenue (see paragraph 5 of the Commissioners' letter) estimated at Rs.100,000 making a net gain of Rs.516,500 or say Rs.500,000. It must be recollected, however, that under this plan it is not proposed to remit the sugar export duty.

12. I must frankly admit that I look upon all these estimates, both those made by the Commissioners and my own, as highly problematical; but as the proposals of the Commissioners have been treated in strict confidence it is not possible for me to make

T

87

more extensive inquiries or to have the estimates checked or criticised. It appears to me that whatever plan is adopted it will be necessary to allow for the possibility of all available resources being exhausted by the end of the current year. The most serious problem therefore is the possibility of securing a balanced budget in 1932-33 which will be examined below.

13. The summary of the position in 1932-33 is given in para- graphs 11 and 12 of the Commissioners' letter. Their estimate con- templates saving on Civil Service expenditure in that year of Rs.1,434,572. It assumes extra charges transferred from various funds to general expenditure of Rs.199,002 or say Rs.200,000 and contemplates a deficit on railways of Rs.300,000. The position is summed up in the table given in paragraph 12 of their letter. The allowance of Rs.400,000 for interest on the Hurricane Loan appears to call for comment. The Hurricane Loan covers an amount of £500,000 to be lent to proprietors on first mortgage, and £75,000 lent to the Government to repair damage. The sum of Rs.400,000 provided for this purpose is I understand intended to be sufficient to cover interest on the whole amount at about 5 per cent. though i do not know exactly what rate of conversion of the rupee has been adopted. I do not think it is fair, however, that the whole of the interest should be charged against the public Treasury with no allowance for recovery from mortgagors. This money has been lent on first mortgage under the guarantee of the Imperial Govern- ment. If the present depression in the sugar industry continues to be so acute during the next year that little or nothing can be recovered from mortgagors by way of interest, the continued de- pression will so affect conditions generally that there is likely to be a further decline in Colonial revenues and I cannot but feel that in such circumstances, regrettable as it might be in present con- ditions, the terms of the Guarantee Act would have to be brought into force to relieve the Colony. Indeed unless there is some sign of recovery in the sugar position by next year I fear it is probable that all estimates of revenue may be found to be unrealizable.

14. The charge of Rs.150,000 for pensions on the other hand will I think be found insufficient if the full programme of retrench- ment is carried out. The Commissioners in paragraph 12 of their letter estimate that of Rs.250,000 allowed in the current year for pensions and gratuities arising from retrenchment about Rs.100,000 will be payable in gratuities. Even if it is possible to carry out the full programme of retrenchment I doubt very much whether this allowance is not under-estimated. There are some 230 officials of all grades affected. In some cases they will be already of pen- sionable age: if so their pensions will be proportionately higher. I have not the data however from which a calculation can be made in the time available before the mail goes. It appears to me how- ever that in many cases the pensions and gratuities earned under

,