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11. A.(2) Up to the present the gross receipts from wireless telegraphy have been included in assessable revenue, The Colony claim that the expenses (personal emoluments, stores, rent of offices, interest on capital expenditure, etc.) should be deducted before assessment to contribution is made.
The principles involved in the assessment of "net receipts" only of productive undertakings are given in para. 4 above.
On the analogy of telephones and as receipts from the wireless service as a class of revenue did not exist in 1895, there is a case for consideration for treating this undertaking on the basis of "net receipts".
The financial effect of granting this claim would be to reduce the contribution in 1930 and 1931 by about £2,000 and £2,750 respectively, including about £200 in sach year in respect of the claim at A(1) above.
12. A. (3). The Colony claim that the rate of 4 per cent under A(1) should be 6 per cent owing to the increased interest rates now obtaining. No mention is made in the present memorandum fram the Colony of the date from which it is proposed that this concession should take effect, bus in paragraph 7 of the Governor's despatch 28th July 1928, the beginning of 1915 is suggested. Neither As 16 proposed in the latest despatch that the 6 per cent should apply to any undertakings but the wireless telography although In paragraph 7 mentioned above it is considered that it should apply to "all expenditure fran revenues since the beginning of 1915", It would, however, naturally follow, if the higher rate is agreed to in the case of wireless belography, it should be employed, from whatever date is adopted for the wireless service, in the case of further capital expenditure from revenue on other productive undertakings financed from revenue, e.g,, railways etc., or waterworks if this latter undertaking were allowed to be treated like a commercial undertaking on the basis of net receipts (see paragraph 17 below).
No case is made out for choosing 6 per cent in preference to any rate above 4 per cont, nor are any reasons given for selecting 1915 as the starting date, but presumably If it is tɔ be altered, the rate to be used should bear a relationship to the average rates which the Colony would have had to pay if they had raised a public loan at the various times when capital expenditure was financed from revenue. If the rates for loans at the times of the expenditure ware 4%- 5% a suitable rate for the rebate would appear to be 417-54%, There are two points therefore to be settled here:-
(a) Is the deduction from gross revenue of 4% of
capital expenditure on productive undertakings to be increased to a higher percentage; and
(b)
Is the deduction at a higher percentage to be made
retrospective?
(a) is a question in which the Treasury is more competent to deal with than the War Office, and they may think it necessary for the Colony to be asked for further information.
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