CO129-532-1 Basis of assessment for military contributions 9-12-1930 - 29-3-1932 — Page 97

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the development of the Colonial railways. It was agreed that only such portion of the railway receipts should be included in the assessable revenue as would, if the railways were a commercial speculation, and allowing for the interest on capital expenditure, be available for the payment of dividend, The Colonies in which this practice was approved were permitted to deduct from the gross railway revenue the charges for working expenses and maintenance and for interest and sinking fund on any sums borrowed for the construction of the railways. As explained above, the percentage of assessable revenue on which the contribution ia calculated was raised from 7 to 9 in the case of Ceylon, and from 5 to 5 in the case of Mauritius, where railways existed at the time of the Settlement, to enable the yield of the percentage to be approximately the same in each case as it was before the special concession was introduced for railway receipts.

Subsequently in 1899 it was agreed at the suggestion of the Colonial Office that a similar arrangement to that for existing railways should be adopted in the case of new

(1.0. they did not exist when the percentages were Tixed) undertakings such as railways, tramways, gas or electric lighting, or other productive works, where such new commercial undertakings are not different in character and productiveness from railways. The appropriate Colonial Ordinances relating to Military Contributions were amended accordingly. It is important to note, however, that the Treasury when approving this concession stated that "each case as it arises should be considered on its merits by the three departments concerned before Her Majesty's Government commits itself to the calculation of the percentage on net instead of gross receipts". (Treasury Letter No. 9892/99 of 22nd June, 1899, to the Colonial Office (Straits Settlements)). (See also Treasury Letter No. 15072/11 to the Colonial Office of 12th August, 1911 (Hong Kong)). This method of assessment has since been applied, without alteration of the relative percentage, to railways (Straits Settlements 1897, Hong Kong 1911), telephones and tramways (Straits Settlements 1899), an opium factory (Straits Settlements 1910), arrack distilleries (Ceylon 1912), wharves (Straits Settlements 1911), all of which undertakings were not in operation in 1895.

The method has never been applied to Post Offices, but these of course were in operation in 1895 and refusal has been based on the principle that treatment of postal receipts on the net basis would involve adjustment of the percentage.

5. Capital Expenditure, In addition, it has been agreed (Treasury Letter No. 6103/04 of 19th April, 1904. to the War Office (Straits Settlements)), that where the reven us of the Government undertakings under consideration is dealt with on the basis of net receipts, if any capital expenditure thereon is provided from annual revenue (instead of being provided by a loan, see para.2 of Colonial office letter No. 39081/1903 of 21st March 1904, to the War Office (Straits Settlements)) a deduction of 4% of such capital expenditure may be made for a period of 50 years from the gross receipts of such undertakings. The service of a loan, interest and sinking fund is one of the expenses of an undertaking to be deducted from the gross total when netting receipts and the rebate represents a corresponding allowance. The rate of 4 per cent represents 3 per cent for interest and 1 per cent for sinking fund (paragraph 5 of C.0. letter No. 30081/1903 of 21st March 1904 to the War Office).

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