CO129-547-4 Military contributions 23-2-1934 - 28-11-1934 — Page 8

A.

contribution on net profits of $744,230 in 1933.

The amount payable would have been $148,846.

Actually in 1933 the Hong Kong Government paid

$110,150 approximately on account of Military

contribution in respect of the revenue required

for the service of the 1918/43 inscribed Stock

and nothing on the net profits of the Railway.

Therefore, if the identity of the 1906 Railway

loan is held to have been extinguished by the

conversion, the Hong Kong Government will

probably in future have to pay more on account

of Military Contribution in respect of the

profits on the railway than they paid previously

on the revenue required for the service of the

plus the wet propts (if any) on the Railway)

1918/43 Stock notwithstanding the fact that

£1,241,100 of that stock will have been redeemed,

and the remainder (£244,633) converted.

It would

be unfair to ask them further to increase their

payments by making the revenue required for the

service of the converted portion liable to

assessment for the purpose of calculating

Military Contribution.

If on the other hand it is held that

the identity of the remainder of the 1906

Railway loan of £1,143,933 which is to be

converted, namely £244,633, will not have been

destroyed by the conversion the position will

be that so long as that remainder is unredeemed

the Government of Hong Kong will be at liberty

to include the revenue required for its service (31% of $3,400,000 annually on account of interest) on the expenditure side in calculating the net profits on the railway.

It is impossible to say what the exact

results of doing so will be, but on the 1933

figures

8

Page

9

figures the position would be as follows:

Railway

Gross Receipts

Revenue

Expenditure