CO129-577-1 Estimates- effect of war on colonial estimates 15-9-1939 - 4-10-1939 — Page 8

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DRAFTON 1450/39 GENL:

CIRCULAR TELEGRAM from the Secretary of State for the

Colonies to all Colonies, Protectorates and endated

Territories and Borneo.

(sent 4.30 a.m.

29th September, 1939).

CIRCULAR No. 72 CONFIDENTIAL.

My confidential circular telegram No.62.

I am

2

grateful for replies so far received.

2

You will now have heard main lines of war budget

here and have noted the drastic character of the

proposals which it contains. The taxpayer in this country

is being called upon to assume a burden of unprecedented

weight to enable the war to be pursued.

You will have

observed that the greater part of the increased revenue

is to be obtained from direct taxation.

Income tax is

An excess

to be raised to 7/6d, in the pound and there are also

heavy increases in surtex and estate duty. profits tax of 60 per cent is also to be imposed.

3. I feel that these new and unprecedented

sacrifices by the taxpayer here strongly underline the considerations set out in paragraphs 3, 4 and 5 of my

telegram under reference.

Apart from

In particular I feel that serious

consideration must now be given to the imposition of

income tax in Colonies where it does not exist and to

the increase of the rate where it does.

practical necessity of raising new money which is acutely felt in many Colonies there are in many cases political

reasons which will become stronger as the war goes on for adjusting the incidence of taxation so as to place the

burden

q

No ite

Kong

X

burden herd is can best be borne. I am of opinion

that Colonial Governments need not be unduly deterred from

imposing income tax by possible adzinistrative difficulties. Experience in many Colonies shows that these can be

successfully overcone.

The alternative to income tax vill I fear in many cases

prove to be a levy on official salaries.

440 I feel sure that I can rely upon you to take my

suggestions carefully into account, They call for

considerable sacrifices but such sacrifices are being made

in this country and I am confident that the Colonial Empire

will be no less ready to shoulder its share of the burden,