CO129-566-21 Military contributions 7-5-1938 - 31-1-1939 — Page 41

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be

Contribution is that there has to be collected in addition

to the revenue necessary to maintain ordinary Government

services an extra revenue of 25%. It has been argued

that, although the Defence Contribution is less than the

actual cost of the Imperial Garrison maintained in Hong Kong

and still less than the total cost of defence including

Naval defence, the amount payable under this arrangement

is excessive, on the ground that a great part of that

expense arises out of general Imperial needs and in

particular the protection of life and property in China

and is not related to the actual needs of the Colony. I

do not desire, however, to take that attitude. I fully

recognise not only that the presence of large military

نا

and naval forces here is itself of very considerable value

to trade, but also that the security which rests ultimately

on those defence forces is one of the main foundations

of Hong Kong's trade and other economic activities; and

that it is right that the Colony should contribute to its

maintenance.

6.

What I am concerned with are the repercussions

of the "percentage of revenue" basis on policy and to a

lesser degree on accounting procedure. No doubt when

this method of assessment was adopted it was thought that

it would constitute a rough and ready means of securing

a correspondence between the Defence Contribution and the

Colony's ability to pay. Such little virtue as this principle might have would, presumably, continue in force

so long as the objects of taxation remained unchanged and

the receipts reflected more or less correctly variations

in prosperity. But since 1901 the bases and the purposes

of revenue have undergone much metamorphosis throughout