CO129-554-1 Loans for public works 13-3-1935 - 30-11-1935 — Page 35

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34

(36)

M

33706

34

No.11 of 1934).

On the other hand the Inscribed Stock was

redeemable at the latest in 1943 while the Dollar Loan will

not be wholly redeemed until 1959.

As stated in paragraphs 4 and 5 of the War Office letter

only the net profits of the Railway are assessable to Military

Contribution and this automatically protects the service of the

loan from paying contribution provided the Railway is paying

its way.

The replacement of a loan service of £51,478 by one

of $289,871 for 1935 (included under "Interest on 31% Dollar Loan" and "Redemption of Bonds (31% Dollar Loan)" on page 112

of the Estimates for 1935) together with an estimated increase

in the gross receipts of the Railway from $1,581,000 for 1934 to $1,692,900 for 1935, enables Military Contribution to be payable from net profits on the Railway ($668,377) for the first time as shown on page 112 of the Estimates for 1935. With the exemption of the service of the Railway portion of the loan (item 7) - $289,871 - from Military Contribution a net sum of

$378,506 remains taxable.

Had the Sterling Loan not been redeemed and had its

service been met from Railway earnings such an amount would not be assessable to Military Contribution, as there would have

been a deficit on the Railway of $103,793.

The War Office, however, is afraid that by the exemption

of item 7 from Military Contribution it is liable to lose

Military Contribution on the Railway deficit as calculated in paragraph 4 of the War Office letter. That is correct, pro- vided there is a deficit but the progressive increase in the gross earnings of the Railway together with the fact that it is no longer necessary to meet a service of £51,478 reduces that risk out of all comparison with the immediate increase in the amount assessable to Military Contribution as shown

in the table annexed.