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417

H

C. 72856/30 (No. 4].

(Confidential.)

SIR,

94

No. 67.

HONG KONG.

THE SECRETARY OF STATE

to

THE GOVERNOR. [Answered by No. 68.]

Downing Street, 26th July, 1930. With further reference to Sir Cecil Clementi's Confidential despatch of the 31st July last*, regarding the military contribution payable by the Government of Hong Kong, I have the honour to inform you that, after consultation with the Lords Com- missioners of the Treasury and the Army Council, I regret that I am unable to agree to the proposal that an entirely new basis of assessment, viz., a percentage of the annual rateable valuation of the Colony should be adopted in place of the present basis of a percentage of 20 per cent of annual revenue.

2. I am, however, considering whether in view of the reserved claims mentioned in Mr. Southorn's Confidential (1) despatch of the 28th July, 1928†, and the proposals in Sir Cecil Clementi's despatch No. 400 of the 10th September, 1929, any modifications may be desirable and possible in the existing system in order to bring it up to date. In any readjustment it will be necessary to be guided by the principles set out in the following paragraph which have been agreed to govern the assessment of the military contribution not only of Hong Kong but also of the other Colonies who make such contributions.

3. It is generally agreed that it is equitable that all Colonial Governments which are financially in a position to do so should contribute in proportion to their means towards the cost of their military garrisons. In the case of Hong Kong the contribution to be made has been fixed for many years past at an amount equal to the cost of the military garrison or 20 per cent of the "assessable revenue," whichever is less. That percentage was fixed in the light of the discussions of the Haliburton Committee towards the end of the last century and of revenue conditions at the time. In spite of occasional anomalies it is not unsatisfactory as an index of the means of the Colony. The Lords Commissioners of the Treasury have represented to me that the exemption from assessment for contribu- tion of any items of revenue which were taken into account in reaching this figure would pro tanto disturb the proportion between means and contribution then judged, after careful consideration, to be equitable, and it would accordingly be necessary to restore the proportion by a corresponding increase in the percentage, if such exemptions were allowed. On the other hand since the deliberations of the Haliburton Committee, the sphere of governmental activities in Hong Kong has been considerably enlarged, and I am prepared to represent to Their Lordships that it may equally be argued that, if "assessable revenue" is to be interpreted as the whole Colonial revenue reduced only by the exemptions allowed at the time of the Committee's report, then the same relation may no longer subsist between assessable revenue and general means as subsisted at the time when the present percentage was fixed and that it is, therefore, for consideration whether it might not be equitable to exempt from assessment for contribution certain items of revenue which represent the gross receipts of quasi-industrial undertakings which were not then in existence, c.g., receipts from wireless undertakings, and, in accordance with the principles accepted by the Haliburton Committee, to assess only the net revenue from such undertakings. Similarly, changed conditions might be held to justify a change in the rate of annual percentage allowance upon capital expenditure from current revenues on railways, telephone, or other productive undertakings, as provided by Section 3 of the Defence Contribution Ordinance, 1901.

4. I am accordingly to request you to submit for consideration of His Majesty's Government such of the claims referred to in paragraph 2 as can be regarded as justified on the basis of the principles indicated in paragraph 3. The reasons for the exemption or different treatment of assessment of each particular item of revenue should be given in detail together with an estimate of the probable effect on the contribution judged on the basis of the revenue of recent years. It will be of assistance if the various individual amounts of revenue can be linked up with the figures in any printed sources of information.

I have, &c..

PASSFIELD.

C. 82756/31 [No. 1}.

(Confidential.)

MY LORD,

95

No. 68.

HONG KONG.

THE GOVERNOR

to

THE SECRETARY OF STATE. (Received 5th January, 1931.)

Government House, Hong Kong, 11th December, 1930. I have the honour to acknowledge the receipt of Your Lordship's despatch, Confidential, of the 26th July, 1930*, dealing with the subject of the military contribution payable by this Government, and note that Your Lordship is unable to agree to the proposal that an entirely new basis of assessment, viz., a percentage of the annual rateable valuation of the Colony, should be adopted in the place of the present basis of a percentage (20 per cent) of annual revenue.

2. In reply to paragraph 4 of that despatch. I forward for Your Lordship's information a memorandum which has been drawn up by Mr. Taylor, Deputy Treasurer of the Colony. I would draw particular attention to the final paragraph of this memo- randum dealing with the question of the capital expenditure on waterworks, which have been financed out of the current revenue of the Colony.

3. I am in accord with the representations contained in the memorandum, and shall

be glad if they may receive the consideration of His Majesty's Government.

Enclosure in No. 68.

I have, &c..

W. PEEL,

Governor, &c.

MEMORANDUM Regarding EXEMPTION FROM Military CONTRIBUTION Of Certain ItEMS OF REVENUE AND Regarding the PERCENTAGE ALLOWANCE ON Capital ExpenDITURE ON PRODUCTIVE UNDERTAKINGS.

A. Wireless Telegraphy.

Capital Expenditure.—I attach detailed statements showing the capital outlay on wireless telegraphy since its inception in 1915. These figures have been taken from the Treasury books and are shown in the final Treasury accounts for the years in question.

The following is a summary:-

Year.

$

1915

55,506

1916

14,092

1917

8,300

1918

-569

1919

3,340

1920

1921

521

1922

4,909

1923

28,228

1924

18,138

1925

149,818

1926

13,975

1927

5,985

1928

62,214

1929

98,703

$464,298

The percentage allowance authorized by Section 3 of the Defence Contribution Ordinance No. 1 of 1901 on productive undertakings is at the rate of 4 per cent on the

* No. 67.

• C. 62833/29 [No. 5]; not printed.

↑ No. 56.

‡ C. 62916/29 [No. 1]: not printed.

PUBLIC RECORD OFFICE

Reference :-

ELEC.O. 882/11

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