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10
railway receipts were first treated on the basis of net receipts in those Colonies. It was introduced in the Straits Settlements Military Contribution Ordinance in 1899 (see paragraph 4, Class I, above) when it was desired to treat a public telephone system on the basis of net receipts, and the Colonial Office (Colonial Office letter of 5th July, 1899, to the Treasury) stated that the insertion of this provision will
LE
remove
the inconvenience of having to introduce an amending Ordinance in each case of the establishment of a new productive undertaking and Mr. Chamberlain will instruct the Governor of the Straits Settlements that no new undertaking is to be deemed of a similar character to railways or telephones without previous reference to the Secretary of State, who will then submit the proposal to Their Lordships and to the Secretary of State for War." The second portion of the section follows the lines of a provision (see paragraph 5 above) introduced in Ceylon, Mauritius, and the Straits Settlements in 1904 (Treasury letter No. 6103/04 to the War Office of 19th April, 1904, and Colonial Office letter to the War Office of 17th May, 1904) to enable capital expenditure met from revenue to be treated as if the expenditure had been met by a loan deduction for the service of which were provided for in the first portion of the section.
no
No such provisions were required in Hong Kong until the construction of the British section of the Kowloon-Canton Railway in 1911 as until that date there were productive undertakings "in the Colony recognized for military contributions purposes. On the opening of the railway it was agreed that the principle of net receipts should be extended to it and an amending Ordinance on the lines of the Straits Settlements Ordinances of 1899 and 1904 was approved.
>
It was, however, expressly laid down (Treasury letter No. 15072/11 to the Colonial Office of 12th August, 1911) that “*. as in the similar case of the Straits Settle- ments (Colonial Office letter of the 5th July)
in the event of
< any repro- ductive undertakings other than railways or telephones being established by the Colonial Government, the principle of net receipts to military contribution shall not be extended to such undertakings without previous reference to himself (the Secretary of State for the Colonies), in order that the question may first be submitted to this Board and the Army Council." This condition was definitely reported to the Colony in Colonial Office despatch of 19th August, 1911, to the Governor of Hong Kong. The second portion of the section can obviously not be applied unless it has been previously agreed that an undertaking should be treated under the first portion of the section as a productive undertaking."
The fact is that the section of the Hong Kong Ordinance quoted by the Deputy Treasurer is only of a permissive nature made wide in its terms to obviate the necessity of amending ordinances. It is not general in its application to all productive under- takings in a Colony and neither the whole of the section, nor a portion of it, can be extended to any particular undertaking, not previously approved for treatment on net receipts, without the prior authority of His Majesty's Government. There has thus been no error in law in the past treatment of waterworks receipts in Hong Kong. War Office,
August, 1931.
Nature of Modification.
Mare-Aux-Vacoas and other Motor Works
(Mauritius).
11
APPENDIX.
(1) Assessment of Net Receipts.
Date.
1897
Penang Public Telephones (Straits) Penang Public Tramways (Straits) Currency Note Issue (Straits)
1899
1900
Do.
1902
Capital expenditure on productive under.
takings found from revenue (General).
Christmas Island (Straits)
Labuan (Straits) Weihaiwei Post Office (Hong Kong) Government Opium Factory (Straits)
1904
Grounds for Concession.
Accepted by Imperial Government, under pro-
test, as analogous to railways. Analogous to railways.
The Government issue was to supplement issue of notes by banks. The silver received for the notes formed a fund for their pay- ment. After deducting expenses and depreciation the balance of interest on investment of part of this fund was avail- able as general revenue.
4 per cent. deduction from receipts allowed on analogy of interest, &c., on capital pro- vided by loan.
Not part of revenue in 1895.
Do.
This Post Office worked at a loss.
Analogous to railways.
Do.
1901 and 1905
1906
1909
1910
"
**
(Hong Kong)
}
Penang Government Wharves (Straits)... Kowloon-Canton Railway (Hong Kong)... Government Distilleries (Ceylon) Participation in Empire Exhibition,
Wembley (Hong Kong).
1911
Do.
1911
Railway.
1912
1925
Analogous to railways.
Colony would only agree to take part in Exhibition if War Office agreed to prin- ciple of net profits only being applied.
(2) Exclusion of Items not Properly Revenue,
Nature of Modification.
Date.
Grounds for Concession.
Reimbursements:-
Mechanical Transport Loan (Mauri-
tius)
1902
Not regarded as revenue."
Planters Loan (Mauritius)
1903
Widows' and Orphans' Pension Fund
(Straits).
1903
Not assessed in 1895.
Widows' and Orphans' Pension Fund (Ceylon, Mauritius, and Hong Kong), Refunds of revenue wrongly credited
(Straits).
1904
Do.
1905
Such amounts are not properly revenue.
Praya Reclamation Fund, balance of
(Hong Kong). Balance of **Quarters for Nursing
Sisters" Fund (Hong Kong). Refunds of revenue wrongly credited (Hong Kong, Mauritius, and Ceylon) Payments to Seconded Officers Pension
Funds (Straits).
1906
Fund found from revenue already assessed «
military contribution.
1910
Do.
1910
Such amounts are not properly revenue.
1911
1919
Repayment to revenue in respect of re- duced loss on rice purchases (Hong Kong).
1919
Receipts accruing in respect of returned
stores (Hong Kong). Adjustment of exchanges (annual value- tion of sterling investments) (Hong Kong).
1922
Do.
Do.
Represents realization of capital.
1922
Not real revenue only paper accounting.
1928
Not properly revenue.
Refund of revenue (repayment to British America Tobacco Company in respect of rebate on duty paid previous year). Shing Num Valley Waterworks. (Repay- .ment to revenue out of loan of $2,000,000 capital expenditure de- irayed from revenue.)
1928
The $2,000,000 expended from revenue had
already been subject to assessment,
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