Appendix No. 6 Enclosure No. 3.
No. 2.
8
34. In the correspondence published in the Appendix, the Governor says that, "excluding the disturbance introduced by the violent fall in exchange, the financial position of the Colony is in a sound and satisfactory position," and the Colonial accounts show that the revenue, instead of decreasing by over Appendix 200,000 dollars between 1888 and 1892, the last year for which completed accounts have been received, has increased by considerably more than that amount, an increase due apparently to an augmented yield from existing taxes Appendix rather than to the imposition of fresh taxation,* while there has been for many years a very large expenditure on public works, and an increased expenditure under 11 out of 16 of the sub-heads comprised in the Colonial Estimates, and last year the Colony raised a further loan of 100,0001. for the provision of extraordinary public works.
No. 3.
Appendix No. 6.
35. Under these circumstances, as the contribution of 40,000, with the local expenditure on Volunteers added, will only amount to a charge of 18-24 per cent. of the estimated total revenue of 1894, as compared with 18-79 the estimated charge in 1890, the Committee do not consider that any present reduction in the contribution is called for. Should the dollar fall to 2s. in 1895, as seems very probable, and should the revenues of that year not exceed those estimated for 1894, the defence charges of the Colony would only be augmented to 20:46 per cent. of its total revenue.
36. In the Colonial representations already quoted, while increased taxation is deprecated as inopportune, no reduction of the Colonial expenditure is suggested, except in regard to that incurred for the defence of the Colony. Defence expenditure, essential to the safety of a country, should not be the first for reduction, and it is to be hoped that the local enquiries instituted by the Secretary of State into the taxation and expenditure of the Colony, with a view to increasing the one and reducing the other, will produce results which will enable it to provide for its small proportion (about one-sixth) of the cost of its land defence, without financial difficulty.
37. The outcome of the "silver question" is so wrapped in uncertainty, that it is impossible for the Committee to forecast the effect which it may have on the financial condition of Hong Kong in 1895 and subsequent years. At present there seems no reason to anticipate that any special action will be necessary on the part of the Imperial Government, in order to give relief to the Colonial exchequer in the matter of its defence expenditure. Whether such relief will be required depends, not only on the value of silver, but also on the efforts of the Colony to curtail its general expenditure and expand its revenues, and it will suffice to deal with the question of Imperial aid when the necessity for such aid shall have been established.
* Hong Kong and Singapore being free ports no revenue is derived from customs duties In referring to this in their report upon the Straits Settlements, the Committee stated--
"It is right to draw attention to the fact, that however much the fiscal systems of the Straits Settle- meute and Hong Kong, which are nearly identical, may be open to theoretical criticism, those Colonies continue to derive, from a few taxes cheaply collectext, a larger revenue per head than any of the under- mentioned communities, native and European, whose territories border on the Eastern seas. That this is so will be seen from the following table
Annam-Touking
Japan
British India
Ceylon
Siam ..
Netherlands' India
Cochin Ching
The Straits Settlements
Hong Kong..
Revenue por head
of population about dollare,
2
સ
B
31
7
91"
The Hong Kong General Revenue Returns include the municipal taxes. If these are added
in the case of the Straits (where they amount to nearly 1,000,000 dollars) the charge per head in the Straits would be raised to about 9 dollars.
1894.
See also paragraphs 44 to 47 of the Committee's Report, Section 9, on Straits Settlements,
9
RECOMMENDATION.
22.
343
38. The Committee recommend that the present Military Contribution See paras. should be continued during the five years ending 1898, unless conditions should 21, 216, and hereafter arise requiring its reconsideration before that date. Assuming that neither the value of the dollar, nor the revenue of the Colony, vary during that period, a contribution of 40,000, together with the local expenditure on Volunteers, 10,705 dollars, will amount to 366,260 dollars, and would compare as follows with the estimated military expenditure of the following countries for 1894:-
Hong Kong
Rate.
See Appendix No. 7.
Revenue.
Defence charges.
Per head of population.
Per cent. of revenue.
dollars. 1,605,768
dollars.
366,200
3. d.
3 5t
22.80
Straits Settlements
doilars. 3,818,170
dollars.
904,288*
3 9†
23.68
rupees. 691,527,000
£ 94,175,000
rupees. 229,500,000
£ 36,875,671
1 31
33.18
19 21
39.15
India
United Kingdom
39. Three of these countries, viz., Singapore, India, and the United Kingdom, in addition to the revenues above detailed, possess separate municipal revenues, which are expended on purely municipal services. Hong Kong has no municipality, and municipal services, connected with its capital Victoria, are provided for out of the general revenues of the Colony. To make the above comparison perfectly fair to Hong Kong, its total revenue of 2,007,210 dollars has been arbitrarily reduced by 20 per cent., which is about the proportion which the municipal expenditure of the Straits Settlements bears to its total revenues.
CAPITAL EXPENDITURE ON BARRACKS, &C.
Hong
Kong,
40. In their report of 1888, the Committee stated that the rough preliminary Committee's estimate of the cost of providing barracks for the increased garrison of Hong Report, Kong, amounted to 212,000l. There was at that time a proposal to surrender
Section 4, to the Colony certain barracks and their sites, which were of great commercial value, and to construct new barracks on less valuable sites. This would have 1888, paras. augmented the charge to about 262,0001., but as a set-off, it was estimated that 31 to 34. the surrendered sites would realize 140,0007., leaving the net cost about 122,0001. The Committee recommended that one-third of the balance remaining, after
* Those figures are based on the average contribution recommended for the Straits Settlements for the period 1994-98, viz., 100,000l. For special reasons the Committee recommended a reduction in the first two years, bringing the average payment for those years down to 81,2504 plas local expenditure on Volunteers, 15,400 dollars, thus temporarily reducing the average proportion, for those two years, to 38. 04. per head of population, and 19 26 per cent, of revenue. †The chargo in dollars for Hong Kong and the Straits being 1-52 and 1-66 respectively, and in India 1 rupee, per head of population.
The percentage which the military charges of Hong Kong bear to its revenue, as shown in this table, differs from those shown in paragraphs 2, 5, 3, 13, 17, 28 and 35. They are based, as in all previous reports and correspondence, on the proportion which those charges bore at different dates to the total revenues of the Colony. If, as in this tablo, a deduction had been made from the total revenues, at the perioda selected for comparison, viz., 1865, 1888, and 1894, for what may be considered to have been revenue for municipal purposes, though the actual percentage of each period would have been increased, the relative proportions of the percentages would have remained unchanged. It is, therefore, convenient, in the paragraphs dealing with Hong Kong alone, to retain the basis of calculations which has always been adopted, and that basis only needs modification when the comparison is with other countries, as in the above table,
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