CO129-532-1 Basis of assessment for military contributions 9-12-1930 - 29-3-1932 — Page 105

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The question of the waterworks is not now. A reference to the correspondence in 1895 and 1896 immediately preceding the institution of a percentage of revenue as the basis of the military contributions, shows that attempts were then made to secure the exemption of the waterworks revenue amongst other items, from assessment for military contribution

It is true that the basis of the claim for exemption was that such revenue was in the nature of municipal, as in the case of the Straits Settlements, rather than general ́reventie, but in a despatch to the Colonial Office dated 28th August; 1695 the Governor in support of the claim for exemption from assessment said: "In this connection it should be rememberod as the unofficial members point out that loans have been raised by this Government for the purpose of carrying out works of a purely municipal nature such as water works, markets, etc., and it appears equitable that the revenue dérived from such works, instead of being subjected to a charge of 1747 should be applied to their upkeep, to defraying the interest on the monies raised by loan to construct them and to forming a sinking fund with a view to the ultimate liquidation of the debt Incurred on their account"

The Colonial Office reply which was despatched on 1st November, 1005, after consultation with the War Offics and the Treasury, refused to entertain the proposal to exclude the so called municipal receipts from assessment. In April, 1896, the Governor forwarded a memorandum on the Military Contribution by the unofficial members of the Legislative Council in which it was urged that the fixing of 1717 of the general Revenue as the military contribution imposed an undue burden on the Colony as compared with the Straits Settlements in view of the fact that municipal revenue was not included in the general revenue of the Straits Settlements, whereas, owing to there being no municipality in liong Kong, the like reveres was included in general revenue. It was pointed out in the memorandum that the assessed taxes which were distinctly municipal rather than general revenue and were levied as a percentage of the annual value of the houses included 2 per cent in respect of water.

The Colonial Office, however, again refused to agree to the suggestions and pointed out that the 17 per cent was fixed on the basis of the gross revemie less land sales, including all the items which had hitherto been accounted as revenue and that if any exemption were agreed to it would be necessary to reconsider the 17 por cent.

The gross revenue derived from the waterworks as expressed in the water rate has always been included in the revenue of the Colony without deduction, and the views expressed in 1895 and 1896 would appear to apply equally now.

The waterworks revenue should not therofore be treated on the basis of "net" receipts unless the percentage paid for the contribution is varied to allow of the change. It follows that doductions for a rebate on capital expenditure met from revenue which would reprosent a partial netting of

receipts cannot be pomitted.

18./