25
13.
As to (ii) of paragraph 11, it is agreed practice that if capital expenditure on railways and telephones (which are assessable on "net receipts") is defrayed from revenue instead of by loan, 4% of the amount may be deducted (in addition to working expenses) from the gross receipts of the undertaking for a period of 50 years. The 4 was calculated in 1904 and represents as to 3% the cost of a loan and as to 18 the necessary provision for a sinking fund. The rise in rates of interest since 1904 might be held to justify an increase of the 48 Any such increase might have to be extended to the other Eastern Colonies.
14.
It should be noted, however, that the Colonial despatch of 1st November, 1928, which gives the financial effect of conceding the other claims enumerated in parall, does not give it either for (i) appreciation of securities or (ii) interest on capital railway construction. It is not possible to say what would be the financial effect of conceding these two points or either of them (though the amount is probably not large), nor is it clear whether the Colony intends pursuing these claims in conjunction with those at (iii) of paragraph 11.
15.
}
As regards the claims under (iii) of paragraph 11, it would appear from the further despatch dated let November,1928, that most of the classes of revenue there named are not put forward for assessment on net receipts but for total exemption from any assessment. This claim is based on the analogy of the Straits Settlements. Thus the claim does not appear to have been fully stated in the first despatches, and it now falls into two partsî-
(A) The assessment of net instead of gross receipts
on certain productive undertakings.
(B)
The exemption of certain revenues from any assessment whatever.
The despatch of 1st November is by no means clear, and it is not certain that the classification of the various items adopted in this memorandum is precisely that int ended by the Governor. of the "examples" of revenue to be specially treated given in paragraph 11 (iii) above, no account is taken in this memorandum off-
the aerodrome, harbour dredging, ferries,
since (f) do not yet exist, (c) is not yet earning revenue and the interest on the sums expended on (4) in 1926-7 is negligible. Without further information, it is not Possible to weigh the merits of these three items to be classed under either (A) or (B) in preference to forming part of the assessable revenue. Paragraphs 16 and 19 below show the sums that the Governor claims would have been deducted from gross revenue in 1926 and 1927, if the remaining claims in paragraph 11 (iii) had been conceded.
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16.
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