CO129-532-1 Basis of assessment for military contributions 9-12-1930 - 29-3-1932 — Page 66

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Er. Roberts-Wray.

I shall be grateful for your advice on the

following points.

A

Hong Kong pays to the Imperial Government a

Defence Contribution of 20 per cent of the Colonial

revenues under Ordinance No.1 of 1901. In the cal-

culation of the Colonial revenues for this purpose

provision is made for the bringing in of net receipts

only on certain productive undertakings, i.e., rail-

ways, telephones or other productive undertakings of

a similar character, established after the passing of

the Ordinance. In the calculation of net receipts

for this purpose a deduction is authorised for

Contilation

interest and sinking funds on any sums raised by

loan and utilised for the construction of such under-

takings, see the first proviso to Section 3 of the

Ordinance.

Provision is also made (second proviso to

Section 3) for the deduction from the gross receipts

from and after the 1st of January, 1911 "in the case

of any railways, telephones, or other productive

undertakings" of 4 per cent on capital expenditure

met from revenue for a period of 50 years.

The Hong Kong Government have recently put

forward a claim that the allowance of 4 per cent

should be made on capital expenditure on Water Works

met out of revenue, such Water Works being undoubtedly

productive undertakings, and therefore, according to

Hong Kong, coming under the second proviso of Section

3. The War Office resist this because they say the

Water Works, although productive undertakings, were

not established after the coming into force of the

Ordinance (see the first proviso), and are therefore

not entitled to be assessed on a net receipts basis

(this