CO129-550-3 Empire Air Mail Services- cost of participation to be exempted from assessment for military contributions... 19-10-1934 - 17-1-1935 — Page 11

of revenue, not a percentage of expenditure.

It is charged on General Revenue, and particular

exemptions are made in respect of particular

items of revenue. There is no exemption in it

at present in respect of any particular item of

expenditure. Of course it is true to a certain

extent that revenue and expenditure represent

opposite sides of the same thing and that revenue

is only raised in order to meet expenditure.

(I am not at all sure that the principle of making

the defence contribution a percentage of revenue

is really sound. It is obvious that if Hong Kong

is faced, say, with a public health emergency, it

may have to incur additional expenditure and, to

meet it, to raise additional revenue, and there is

no particular reason why this should involve it

in an increase in the defence contribution.

However, that is a general principle which has been settled (temporarily at any rate) in another

connection, and I do not want to reopen it here.

But as things are I do not think that we can

argue that there would be any particular item of

revenue which would be devoted to the air mail

subsidy and which might properly be exempted from

the defence contribution levy. Therefore, while

I suppose we cannot refuse to put to the War

Office the Governor's request for an exemption

of this item from the military contribution,

e.)

I should be disposed to accept the refusal

which we can confidently anticipate and to tell

the Governor that the matter cannot be pressed.

I