CO129-566-21 Military contributions 7-5-1938 - 31-1-1939 — Page 46

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11.

(c)

percentage of the rating valuation of the

Colony.

A proposal by Mr. Kelvin-Stark to base the assessment on the yield of the liquor and

tobacco duties assuming the present rates of

duty and exchange value of the Hong Kong dollar. (d) A proposal to construct an index of prosperity

made up of such elements as the rating

assessment, import and export figures, note circulation, stock and share values; and to

base the assessment on that index.

(e) A contribution fixed in dollars or sterling,

for a term of years and subject to, say, quinquennial re-assessment by agreement or on some agreed formula.

I do not think it is possible to sustain the Lugard proposal. It depends partly on whether the Government is financing Public Works out of revenue or loan and partly on whether revenue happens to be declining or increasing. It would tend to magnify enormously the differences between contributions payable in different

years.

12.

Mr. Kelvin-Stark's proposal to base a contribution on the yield of liquor and tobacco duties has attractions but it suffers from the defect that it would tend to become artificial as years go by and the actual rates of duty varied from the conventional rates, and would also be liable to be affected by changes in habits as regards consumption of liquor and tobacco.

13.

An "index of prosperity" might be the ideal method in theory but the calculation of a satisfactory