CO129-561-10 Estimates 1938 2-9-1937 - 23-9-1938 — Page 3

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See 53687/37.

See (5) on the above file.

There would, I think, be no occasion for

pressing for further curtailment of services,

and if objection is taken to the proposals, it

seems probable that taxation would have to be

raised. It may be noted that the 0.A.G.

considers that taxation in the Colony is still

low. The Hong Kong Estimates of Revenue are

generally conservative and normally there werk.

be no objection to keeping taxation at its

present level, I think.

Two factors affect the present

position adversely however.

(1) Owing to the shortage of water

would l

supplies, the Colony has recently had to under-

take a programme of expansion involving a

This expendi-

total expenditure of $3,185,000.

ture will be spread over two or three years,

and in the original proposal for this under-

taking the 0.A.G. anticipated that the whole

scheme could be financed from revenue. It is

now proposed that this expenditure shall be met

from loan funds and it is hoped to revise the

whole system of water charges so that the full

cost of the water, including all new capital

expenditure, shall be met by these charges.

There are no loan funds at present available and a sum of $11,000,000 has already been

advanced from surplus balances against the 1934

loan. It is proposed that this precedent should

be followed and that no further part of the 1934 loan should be raised at present as there is

still sufficient cash in hand. I see no

objection