CO129-532-1 Basis of assessment for military contributions 9-12-1930 - 29-3-1932 — Page 102

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As regards (b), the weight ef precedent in all matters relating to concessions regarding assessment of revenue is against retrospective oalculation.

We have no idea what the effect on the contribution of raising the rate from 4%-6% would be, but unless it is made retrospective it would not be of large amount on the undertakings at present dealt with on the basis of net receipts.

12. B. Charges for the Use of Government Kotor Vans,

Carcases are conveyed by Government Heat Vans from abattoir to market and a charge per carcase according to Journey is levied. The Colony claim that the service is a commercial undertaking and that therefore only the net, instead of the gross, receipts should be assessable for military contribution. The only information we have is that the charges levied appear under "Specification of Taxes, Duties &c." in the Blue Book. This might be regarded as affording same argument that the service is one which is a function of the Hong Kong Government and not a commercial undertaking in the sense of railways, etc., and therefore assessable on gross receipts. On the other hand it is doubtful if such a function can be held to be a normal function of Government even in a case where the general and the municipal activities of government are combined as they are at Hong Kong. The amount involved as regards the contribution is only same £200 a year. The authority for the charges quoted in the Blue Book is dated 1919 and therefore the service does not appear to have been included in the Revenue when the percentage was fixed so that the point for decision here is whether or not the service is commercial or not,

13. C. Gap Rock Lighthouse.

The Chinese Government contribute $750 per annum towards the cost of the Gap Rock Lighthouse. The effect of exemption on the contribution is trivial, but the Colony claim total exemption on principle. They argue that as the Colony undertakes the maintenance of a service outside its territory the cost of which is repair by a foreign administration, the only way in which the Colony can avoid loss is to add to the cost so paid a sufficient sum to cover the military contribution payable. This is considered by the Colony to be indefensible in principle because the foreign administration would thus contribute to the upkeep of His Lajesty's Forces. On the other hand we might argue that if not properly defended Hong Kong would not long be in a position to carry out the service and the extra 20% could be regarded simply as a loading for overhead charges.

The authority for this contribution, quoted in the Blue Book, is "C.S.O. No. 148 of 1838" It was included in the revenue when the percentage for military contribution was fixed and cannot therefore, in principle, be omitted from the revenue without a proportionate increase in the percentage for military contribution. It is one of a number of items which the Colony claimed in 1896, when the percentage basis waS introduced, should be excluded from the gross revenue as being appropriation in aids, The Colonial Office replied to the Colony that "if any of their proposals were adopted it would be necessary to reconsider the proportion of revenue which has been paid as the amount of the contribution".

(Colonial/